Where you choose to live is one of the most important decisions you’ll have to make in your adult life. Whether you choose to rent or buy, it is likely that a significant portion of your household income will go toward your rent or monthly mortgage.
Renting a home
One consideration is that renting a house or apartment can sometimes be cheaper than buying a property. Many young couples in Australia choose to live in urban centres or waterfront suburbs. Although they cannot afford to buy a home there, rent is an affordable alternative. In some instances rent prices are cheaper than mortgage payments on the same home.
Depending on your suburb, current property market and how long you intend to stay in the house, buying might be a better option than renting. To determine whether you should buy or rent, check out Australian Securities & Investments Commission’s Rent vs Buy Calculator.
When moving house, the first obvious question is how long you are intending to stay in your current location. One major advantage of renting is that you don’t have to be certain about your long-term plan when deciding where to live. Renters have the option of moving after their lease is up – generally after one year – which provides flexibility. If you are a renter, you can move to a different suburb easily and with relatively few associated costs.
If you are a home buyer and decide to move after a short period of time, moving becomes more costly due to the expenses associated with buying and selling your home.
As a renter, in addition to avoiding the effort and expense of selling your home, you have another advantage over homeowners: if something breaks, it is not always your responsibility to fix it. Since landlords are responsible for all major repairs or upgrades to appliances, renters do not have to incur unexpected expenses.
However, as renters are well aware, renting has its drawbacks as well. As a renter, you can never be sure if you will have to move again. Particularly, if the suburb you live in is in a ‘hot’ market or is experiencing a high degree of densification, you always have the risk that your landlords will increase rent or sell the property, forcing you to move at a time that is not planned or convenient for your family.
As well, renters are limited in their ability to customise their homes to suit their tastes. For example, landlords often prohibit the use of many paint colours and don’t generally permit any major modifications to the layout of their homes (such as removing walls, and changing flooring of fixtures). For these and many other reasons, many couples or families decide to take the plunge into home ownership.
Buying a home
Perhaps the most common reason to own your home is that, eventually, you stop paying rent (and start earning equity).
For homeowners, it typically takes 25-30 years (maximum) to pay off their homes. If you decide to buy a house, you can also enjoy the fact that the money you pay each month is earning you equity in your home (which, by the way, is likely to increase in value by the time you sell). Rather than spending money on a rental property, which will provide you with no long-term assets, putting money towards your own home will pay off in the long run.
It is clear that there are good reasons to rent or to own. But are there other options?
The answer is yes; you do have other options.
Many young buyers are choosing to buy an investment property as a way to break into the market while still renting themselves, or living at home with their parents own. This provides several advantages:
1.Rental income: After saving the initial deposit down payment for an investment property, you can use the rental income from your investment property to pay your current rent and/or supplement your income.
2.Location, location, location: If you are like the many couples who want to live near the beach or CBD but cannot afford to buy there, having an investment property allows you to have the best of both worlds. Get your foot in the door by purchasing a property in a more affordable suburb while still living the lifestyle.
3.Uncertainty: For many young couples establishing in their careers, renting is more suited to their lifestyles. If you are in this position, buying an investment property allows you a source of income, and an ‘in’ to the real estate market, while still allowing you the flexibility afforded to renters in terms of cost and ease of relocation.
At the end of the day, you have to consider pros and cons when making a decision whether to rent or buy a home. If you do decide to buy, you can always maintain it as a rental property while still renting your current home. If you would like more information about buying in to the Hervey Bay Real Estate market, please Whitney Real Estate.