WHICH ONE?

Hotter than Sonia Kruger’s twitter feeds is this question that is on everyone’s lips…Am I better to rent or to buy?

Let’s examine this together…

With growing concern over housing affordability plaguing would be first home buyers, this issue of whether to rent or buy is often a hotly debated one.

As property prices continue to rise solidly, many Gen Y’s are concerned that they may have missed their opportunity to get onto the property ladder altogether.

So, what’s the best way to go? Do you rent? Or do you buy?

As boring as it may sound, there are actually pros & cons for both…here we go…..

The most obvious advantage to renting is flexibility. As a tenant, you can freely locate from home to home & area to area once your lease expires. Obviously there isn’t this type of flexibility when you are a home owner. There are times when renting can be a cheaper alternative to buying, particularly if like many young professionals you prefer the lifestyle & career opportunities that inner & near city locations can provide. Many young people often cannot afford to buy in these locations, but can afford to rent there. There are occasions where your monthly rental payments could be less than what your mortgage repayments would be if you were to buy a comparable property.

One of the big bonuses to renting is that you avoid costly maintenance, repair, rates & insurance bills that go hand in hand with home ownership. As a tenant, it is your landlord who is responsible for taking care of such ongoing expenses.

However, renting does have its fair share of disadvantages. The most obvious being uncertainty as to whether you will be able to remain in a home you have become attached to.

Tenants have very little say in how long they occupy a rental property.

A landlord can ask you to move once your lease expires & can also terminate your lease early for a number of reasons.

Essentially, the home is never yours.

A landlord Or Property Manager can come into your property at anytime as long as they provide sufficient notice & have good reason, such as regular inspections which can happen as often as every three months.

You also cannot make changes to a property to improve your environment, including putting pictures on walls, without the landlords permission.

And then there’s the rising cost of rent. Even though renting may at times appear to be cheaper, rents will always continue to rise in line with the increasing value of properties. Further, you never stop paying rent while most people will pay off their mortgage within 25-30 years.

As a home owner, you certainly have a sense of stability. You can choose how long you wish to live there (as long as you pay your repayments of course) & can make improvements to your property & potentially add value while creating a wonderful thing called EQUITY! (the value of your home minus the amount you owe the banks = your equity). You can use this to potentially purchase additional properties & to borrow against.

Over the years we’ve noticed a growing trend amongst young buyers who choose to get into the property market by continuing to live in rental accommodation while purchasing an investment property before buying a home.

We very often hear….”I cannot afford to buy, that’s why I rent!”. Not always true. What we often find is that many people simply do not know the ins & outs of how to buy & how they can financially afford to. Here’s a true story…A tenant of ours wasn’t looking to buy however he was somewhat fed up with renting. He had a small amount of savings. We had a brand new studio property in the hub of Dee Why, Northern Beaches, Sydney, oversized with luxurious finishes plus a separate study area with a purchase price of $467, 000. He had the deposit of $46, 700 & as this was an off the plan purchase he won’t have to pay a cent until completion of the development in around a year & a half. Guess what else? His stamp duty is $O being a first home buyer, a saving of $16, 505. The he received a government grant of $10, 000 into his account being a first home buyer which = a savings of $26, 505.00. A property such as this would be snapped up at a rental return of approx.$470 per week & would more than pay for itself, infact doing the maths you would be positively geared. Now, if you’re raising eyebrows thinking to yourself “good for him, doesn’t work for me”, you would be shocked at how many options are available to you! We have, as a completely free, zero obligation, service in-house here at Novak Properties, our very own Mortgage Advisor, Marc Conway. Marc has our seal of approval & works for the largest mortgage aggregators in the country, Finsure. We have one more of these incredible studios, you would need to be very quick to purchase – let us show you how!

The Goss!
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