Showing posts with label buy. Show all posts
Showing posts with label buy. Show all posts

Tuesday, January 24, 2012

Renting Is the Gateway to Financial Success


“The bills were endless. There's the rates, the utilities and also the insurance for the property,” Klemencic said. The Klemencics sold up, investing the proceeds in shares, and returned to the rental market. “We save about $600 per month easily in renting rather than buying,” she said.
See Today Tonight story

Saturday, December 3, 2011

Rent Money is Dead Money

I often hear young people say that rent money is dead money.  However, in many instances, it is better to rent than to buy.  This is particularly the case if you only want to live in the property for up to three years.  The transaction costs kill any possible benefits of buying.

Consider the purchase of an apartment for $450,000 in Brisbane.  The stamp duty (unless it is a first home) is just over $14,000.  The real estate agents' commission on resale (when you come to sell) is about $12,000, plus advertising costs.  This totals $26,000, or $500 a week if you own for a year, or $166 a week if you own for three years.

Plus you have to pay rates, body corporate, water and insurance, which for most apartments in Brisbane will be more than $5,000 a year (or about $100 a week).

So if you own for three years, you will be paying about $266 a week for stuff that the landlord would normally pay.

This does not take into account interest payments.  Interest is likely to be more than $24,000 a year (assuming no payment of principal), or $461 a week.

So to own the $450,000 apartment for 3 years will cost the equivalent of at least $727 a week in rent.  Of course, you can rent such an apartment for much less than this.  So if you have a $90,000 deposit, put it in the bank and receive $100 a week in interest, and rent for $500 a week, and you will be at least $327 a week better off renting than buying!

Thursday, June 30, 2011

Buyer Behaviour

From a Johnson Dixon newsletter:

"Enquiry for most forms of property has slowly been gathering pace for some months now which is pleasing. What is not so pleasing is that most buyers in the market today tend to only strike once with an offer on a property, which if not accepted, rather than negotiating further, buyers are moving straight on to the next property. This fundamental change in buyer behaviour represents a radical shift in the market, one that has been brought about by the broad belief that buyers now have the power of choice."

Friday, May 6, 2011

No Buyer's Strike

Online activist group GetUp! decided not to pursue a strike of home purchases to protest at the lack of affordability in the housing market because its own members did not like the idea.

"While the issue of housing affordability is clearly an issue that resonates with plenty of people, GetUp! members don't support a boycott campaign," wrote Kelsey Cooke, online community co-ordinator for GetUp! late last week.

"Over the course of the last couple of weeks, we surveyed a random segment of our membership to gauge support - only 10 per cent strongly support the campaign, and more than half the surveyed members opposed this campaign altogether."

Brisbane Times

Thursday, November 25, 2010