Rent or own PPOR

[Millsey]

It has been said that to never own the house you live in is an advantage when dealing in property investing.

I am currently selling my PPOR in order to rent. This has come about not just because I deal in property investing but for other unavoidable reasons I will not go into .

However since the process has started I can see some advantages to having my equity in " liquid" form ready to be put to work during the coming slump . I don't have to worry about an expensive family trust to put my PPOR into either.

What is your opinion? Do you own your PPOR?

[PC]

Owning your PPOR mortgage free is my preference.

No rent, no mortgage = minimal expenditure on this necessity.
That would be one of the more useful things achieved this cycle!
And my neighbour achieved it as well.

The government doesn't seem to have any qualms about taking
property rights off people.
Any ideas on how to handle this risk?

[RentMaster]

Hi Millsey

I think it all depends on quite a few things.

If you can get your PPOR mortgage free, then it is a god thing. However if the cost of paying the mortgage is more than it would cost you to rent somewhere else then renting might be a good idea.

Of course if you rent, then the capital gain on the property you live in is not yours - it is your landlords.

Owning your home gives you more equity to use when purchasing other properties. Renting gives you more cash to purchase additional properties.

Owning your own home gives you stability, renting gives you flexibility.

I dont think there is any one right or wrong answer.

Personally I own my PPOR.

[JohnL]

There are a number of things to balance up. Whats best financially is different from stability (verses flexibility), the emotional need to have your own home etc.

If you have a goal of no personal debt (re John Burley's teachings), then the dilema is how to achieve this. One way is to rent and invest agressively until you have the cash to buy your own home.

With the property boom virtually over, I would be tempted to rent and invest as capital gain may not be a major factor for a while. But it certainly depends on your personal situation and only you can ultimately decide.

John

John

[Millsey]

Thanks for your input everyone. I do tend to agree that it is a personal choice & although it may suit me to rent indefinetly it well may not suit my wife.

However since I am in the position of sellling my PPOR I think I can make some advances in the coming slump as far as purchasing property goes & aim towards a debt free PPOR to keep the family happy.

[Julian]

I can see plenty of good reasons for not owning your PPOR. For a start you might like to live in a nice area, where the rent is very cheap as a proportion of the value, and therefore have your money working hard for you in areas that you might deem less desirable to live, yourself.

My company recently bought the house I now reside in. The payments amount to double what the rent would be. So now it looks like the place might go back on the market and if/when it sells I will rent.

This will achieve two good things: 1. It will free up some more capital for further investing, and 2. It will reduce my company's outgoings significantly.

Capital gains look set to stagnate for a while, and I can assure myself of security of tenure by signing a 12 month lease. Apart from the rent being a lit less than half of my loan payment I won't have to insure the place, nor pay rates, nor R&M. If I put the equity to work I would expect it to double in value in a 12 month period.

So yes, you could say I'm a big fan of NOT owning one's own PPOR, but I expect I'm in the minority here. Mind you, I don't have a big attachment to "things", and houses are just "things" when they are not investments.

Julian

[Fritz]

Re: Rent or own PPOR

What is your opinion? Do you own your PPOR?

Millsey,

I do not own my own PPOR and have rented ever since but own about 10 rentals for long term holds.

I live in Taupo and the first years in a very nice area REAL inexpensive. My rent would have serviced a 60K loan, that was all. So I put my money to work instead, no hassles with R&M, rates, etc, anything broke you picked up the phone and asked for it to be fixed. I was single then.

Have a lovely partner now so we are looking at buying something for us, but we still apply our investment rules on it and want to buy right.

I believe it is a personal choice like Julian said. I still apply basic maths on the deal, ie if we get a mortgage (even if you have none as you miss out on using the money for somethig else) will the repayments be less then the rent we would have paid ?

If still in doubt flip a coin.

Trust this will confuse you further !

Fritz.

[Ted]

At the moment im in my home, when my sweety comes home from police college we are off to a police house. I think the rent is $50 dollars a week and I should get around 150-165 per week for my house or should I say our house ( fingers crossed ) Our plan is to stay in a police house until we are ready to buy our so called dream house< looks at Julians house by the lake in Rotovagas> id say 5 years plus LOL, ill be ready to leave my job by then and retire looking after our children while she runs around with her land shark ( big dog with sharp teeth) putting all the naughty people in Tokoroa in the cells ( her dream, I hate big dogs with sharp teeth)

Ted

[Julian]

Hey Ted,
Don't wait five years until you get your dream house - buy mine now! I'll even take $20k off the asking price for a private deal. You can't ask fairer than that! But wait, there's more. I'll even sign up a 12 month lease to rent it off you for $300 per week, $320 if you pay the power, $340 if you do the lawns and gardening, $400 if you provide the meals, $420 if you provide all of the above and a cleaner.
Julian

[Marcus]

So who gets the free set of steak knives???