Hi RAG -
Your not just a pretty face are you
IMVHO never have truer words been spoke
Cheers
Chimo
Hi RAG -
Your not just a pretty face are you
IMVHO never have truer words been spoke
Cheers
Chimo
What could go wrong.......................
My thoughts again..
The thought of borrowing at least $460k which includes stamp duty, fees, etc. for a house to rent out with the aim to live in upon retitrement or even live in it now - is not economically viable - it won't happen (be fully paid off) - approx total cost of house over 25-30 years including interest = $1.5m.
Those of us (including myself) who were lucky enough to buy property in the past bought at relatively low levels (to today) where our salary levels were able to have at least some realistic chance of paying the fcker off (with or without rental income).
Rent, pump your super to max for 30 years and you will have a much fuller life before and after retirement.. :-)
Anyway - my 2 cents worth....:-)
Good luck!
Splash
I personally think the "great Australian Dream" of home ownership is pushed way to hard in this country. Owning your own home is a terrible way to get ahead financially for young people starting out(owning property is different)Originally Posted by Roughasguts
Your assuming people who dont buy their homes dont have a financial plan for the future. In alot of cases its financially better off to rent than to buy.at least untill you can save enough where you reach the cross over point where the equity in your home outweighs the weekly repayments in rent, which is usually around 50% of your home cost.but each case is different
heres a classic example.
$300,000 home loan over 15-20 years you end up giving the bank over $600,00 in this period. now in this time your land would have increased in value to generally this same figure. (generally speaking and depending where you live)
This = roughly $3000 a week in repayments. + add in rates,mortgage fees+upkeep of your house etc and you can safely assume you've paid an extra $100,000 in the houses lifetime in extra fees+extra $300,000 to the bank.
compare this to a renter. Rents a 4 bedroom home for $1600 a week. (rent isn;t dead money as you get a service from renting). Invest $1200 a month in a managed fun with a modest return of 10% over the same period you would have had a home.and leave yourself an extra $200 a week for extra cash(which the mortgage owner doesn't have)+ you have no rates,no maintance no fees etc
Guess who comes out ontop?
Home owner has a house worth $600,000
The renter has over $1million dollars.
Now this is a very very simple example, and generally workk out better for the renter until you've saved for more than 50% of your home. granted there are lots of other options out there to invest in and borrowing v your equity etc etc but owning your own home isn't always the best strategy for a young person starting out. theres lots more options i.e buying rentals,geared funds etc etc.
anyhow,Im not having a dig at anyone here. I just enjoy a good discussion.
Last edited by Flex; 17-05-2008 at 10:18 PM.
Hi flex, nah discussion is good as long as it doesn't offend anyone, I once thought what you do.
Heres my story so far, my house was brand new when I bought it and has gone up in value 180K now that's in 6 years of mortgage payments and my mortgage payments were exactly the same as the rent I was paying 6 years ago.
So there is no chance I could of paid rent and saved 180k in 6 years with 2 kids and one our 3rd that came 7 weeks early, just this week.
And when I was paying rent there was no room for me 3 cars 2 boats 1 yak and caravan, and a sh!t load of tools and equiptment. So I save again on storage fees and don't have to house hunt when ever the land lord wan't to sell.
Hell I need a place with a flat driveway tripple garage and level block there hard to find.
I honestly could not tell you of anyone that has ever said I wish I never bought my first house, thats the hardest one to get your head around and be comfortable with. The second aparently comes easy, I can't do that yet single income.
Now you said in your last post the renter has a million dollars!!!
and the home owner has 600K yeah on paper maybe.... but it will not, and has not ever happened to many I bet.
I can say for sure not me mates I work with that have rented all there life, poor buggers have just there super there hanging on and sure it's worth around 400K but that's still not a house purchase and they still need money to live on. Where as the home owner will own his home in that time and still have the super to play with.
Now renting is okay you just need to rent your owned house out to your mate and you rent his. Now you get all sorts of benefits like tax deductions new furniture and travel costs subsidised. But I couldn't be bothered with that I would get burnt with my luck.
Hi Chimo, nah I'm not even a pretty face just a slow learner.
Cheers.
yeah all good advice mate. I know my rental theory sounds good on paper, but its very hard to stick by and not many do it. I've been trying it out for 2 yearsto afford another rental.Property is probably the best avenue to wealth, but its about how you do it. not just jumping into debt. as your well aware of
Im a lucky bastard and pay 0 rent as I live in a mining town, which is damn handy. So i have a few extra opportunities your average city dweller doesn't. Just means im 3 hours from the coast to go fishing:S:S
One thing buying a property does is "forced" saving. In the example given above by Flex shows that by investing the $1200 a month in a managed fund the renter comes out on top.
Good theory, but historically people are lazy with saving, hence the "forced" saving into superannuation by the fed government some years ago.
I will always believe that priorities must be buy the house to live in first, wait for your equity to increase naturally as the market increases then possibly buy a moderate toy (boat) using equity and the allowance of lower interest rates using your equity.
Lots of examples like the one given by Flex, but taking advantage of the Mackay housing market from buying October 2003 to selling in November 2006 we turned $150k into $450k.
Also one thing I believe is that when buying you also have to consider that you are not spending the $350k or $450k on the house. It's just the deposit you are spending and the other costs (bank fees etc). Whilst you have to live somewhere and if the cost of living somewhere (renting) is say $350.00 per week, then consider only what you have to pay on top of that to buy (repayments might be $500.00) then the net cost is only $150.00. so you can also use the example that to buy cost you say $50k in deposit etc, and paying it off on around $150 per week.
My example in the property market above actually turned my deposit of around $15k into $300k in 3 years. And that's tax free.
Now I have my boat.
Steve
if the house you buy is your principal residence and then yo usell it at a large "profit" in a higher market then you also have to buy another in that same market. That negates a lot of the "profit".
If you want to use finance to buy a boat..do it. If not..then don't. Life is too short to sit back and worry about amassing wealth because there will come a day when no amount of wealth will save you from the inevitable. When the day does arrive, better to accept it without regrets and missed opportunites. In short...get out there and enjoy your life the way you want to.
The last federal government turned housing with new tax rules away from an essential family need toward a commodity akin to stocks or gold. diamonds. A few (in overall number) typical and average familys were able to ride on the shirt tails of those this change was designed to profit, so a small group of workers did come out in front and housing was a worthy investment by the most base of capitalist terms.
Today and as the government was warned when they chose to enact the new rules, the market has slowed and even reversed, now is not the time to buy a house, some regional areas will still see further gain although property for the next 2 years will no longer represent the tail wagging the dog as it has in the past under speculator demand.
So if it were me, cannot with common sense buy a house in this market, can invest for more gain for the next few years by other methods than buying a dead loss house.
IMO wait out buying a house, not long now and we will see lots of x real estate agents doing work for the dole (yep already an upturn in this), So if gainfully employed and credit is available go for it -if you can handle the one sided treatment as a renter without dreaming of polishing your AK47
If buying a house offer not one red cent more than 70%-75 of todays value.
cheers fnq
Last edited by FNQCairns; 18-05-2008 at 07:46 AM.
Hi Pinhead, true sell high and buy high, or as some do buy a lower price house as they don't need the bigger one any longer. Or they buy two houses and rent one in a faster capital gain area, (you need a crystal ball for that)
But you still have to rent/live somwhere and those prices are still reflected by the house prices on the market. And that is usually 1% of the house price you would be paying per week. Eg 390K home paying $390.00 a week rent. No one is going to escape paying higher prices for housing, not renters that's for sure.
I don't think buying a house is about amassing wealth, it's also a roof over your childrens head that is always going to be there when you do drop dead either quickly or slowly.
I for one don't wan't to rent and find I'm on death door and then wonder how the wife and kids are going to get on and where there going to live. They still won't be able to rent or eat either as they will have no money with out my income.
Cheers.
You mean you have the house but no life insurance? If you do die they will still have nothing to eat so will have to sell the house then become renters.
Finance is there for a reason..for people that want things now..if they can afford it good luck to them. Investment house? never..about 5% nett..not worth the effort.
Great points and good reflective thinking..
Basically, our wages (in major cities) have not raised by the same ratio as interest payments have raised - over last 6-7 years..and never will
Flex - I also live in a mining town with zero rent - Great mate!
Which town do u live in?
Splash
I've never met a poor man who owns his house, investment properties, shares, boats, bikes, cars, etc.
Doesn't work like that they have equity in property, and of course I have life insurance it's bundled with my Super, more than enough to live on.
Life insurance is only good when your young and there isn't much risk of dying.
But when your old your waisting a lot of money for something that may or may not pay up. Thats provided you can get life insurance maybe to old or sick.
Yes Finance is there for a reason. It's there just like insurance so the banks can make even bigger profits from the clients that wan't things now, can't have one with out the other.
Sure it's a personal choice to make, but settle down a bit sounds like your having a go at me.
Last edited by Roughasguts; 18-05-2008 at 11:43 AM.
Hey Splash.
I live in Blackwater atm, Moving to Emerald next year as I landed myself a new job with Rio-tinto.
How about you?
The whole rental thing is fine, IF you look at buying your own home in the future.
I agree Rough that you do not want to be renting at 60. But if you rent and invest for 5-10 years then purchase a home you can sometimes come out better off.. not always, but its a different avenue alot of people dont think of. as banks etc and government really push hard all this instant home ownership.
While im playing 0 rent atm, and interest rates going way up. Housing market isn't that good of an option to buy into atm. So all I do is invest all my money,get a reasonable return and hopefully pay cash for over half my house in 2-4 years time.
If you are one of the lucky bastards who owned a home 3-4 years ago before the boom then I'm extremely envious
Hi Flex I don't know finance thats my misses job.... is it possible to borrow as a supplement to your other loan and pay it off inside the 5year mark to get the best interest rate?
Scott
IFISHCQ2
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