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Buy or rent?


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#1 Aimless

Posted 27 January 2013 - 08:22 AM

We need to move to a bigger house with a bigger backyard for our boys (currently 4 and 2).

If we buy in a relatively good area closer to where we are now, it means selling our current house and taking out a mortgage of $550k, around $800 a week in repayments. It also means putting the boys in private schools as the government schools in the local area have a bad reputation.

Another option is to move to the inner west areas with good local schools but we will need to rent. The rent would be around $700 to $800 a week, but it means not having to pay as much to put the boys in school and closer to amenities and parks. We will also be renting out our current house and the rent will pay off or even be more than the current mortgage repayments.

DH and I are leaning towards renting but I don't like the thought that any time, we could be given a notice to move out and find another place. I've heard of horror stories where renting families were forced to move out practically every year.

Which one would you do?

ETA: we don't want to stay in the current area, even though it would be cheaper, as we're too far away from everything - work, shops, etc.

Edited by Aimless, 27 January 2013 - 08:30 AM.


#2 Kalota

Posted 27 January 2013 - 08:30 AM

Personally, I would buy.... You're going to be paying the same amount each week whether you rent or buy, the difference is that when you buy you will be paying off something that is yours and will always have that investment there.

But that's just me, different people may prefer to rent. I think it really depends on what your heart and gut is telling you you would prefer to do!

#3 LynnyP

Posted 27 January 2013 - 08:30 AM

Renting and buying both have advantages.  My concern is that I can be in my own house when I am old(er) and not be subject to the whims of a private rental system.

You don't need a big backyard with children.  If you take them to parks, playgrounds etc regularly that is fine.

#4 Apageintime

Posted 27 January 2013 - 08:38 AM

Since either way you end up with a house as you're keeping your investment, I'd rent.

Overall your costs will be lower as you won't need to pay for schools. Stamp duty is a killer, but yo can always buy later if you find renting isn't working out (hopefully will a bigger deposit)

#5 Madnesscraves

Posted 27 January 2013 - 08:48 AM

I'd buy. Renting is all good and well but it doesn't seem to benefit you that much in your case. However if it's more of a case that you'd rather live in the classier suburbs then rent.



#6 Holidayromp

Posted 27 January 2013 - 09:03 AM

I would be buying especially if the repayments are going to be the same as renting.

Are you able to look at schools in a different area and have them bus there?  You can apply for out of zone enrolments.

#7 Fluster

Posted 27 January 2013 - 09:11 AM

I'd rent.  You already have the security of your own home to return to.  

We're possibly looking at the same thing in a few years, and I'm in 'camp rent'.

#8 Just Another Cat

Posted 27 January 2013 - 09:16 AM

I would buy.


Not many people rage on about how great their rental/landlord is. Plus the rent won't always be 800 a week. But your house repayments will remain around the 800 mark.


#9 Pearlberry

Posted 27 January 2013 - 09:45 AM

QUOTE (Fluster @ 27/01/2013, 10:11 AM) <{POST_SNAPBACK}>
I'd rent.  You already have the security of your own home to return to.  

We're possibly looking at the same thing in a few years, and I'm in 'camp rent'.


What? Most people's super will not adequately cover them in retirement. The last thing anyone needs to do is make financial decisions like this.

You will be in a much better position financially if you buy again.  Since you are looking at about the same cost anyway, so if you buy you are essentially getting a house for the cost of putting your children through private school. Pretty good deal. Especially if it is a good school.

Plus as PP mentioned, rent will go up. In another 5 years you can expect to be paying more anyway. Yes mortgage rates will go up at some stage too, but that isn't likely for another year or two, when you have paid off some principle anyway.

With property prices and interest rates low. I think buying is a no brainer. Having said that, don't over extend yourself of course.

#10 B.feral3

Posted 27 January 2013 - 09:54 AM

I think you should rent and keep your own house as an investment. That's a better short and long term strategy. Especially when the rental area is better for schools, parks, shops etc like you said.

Edited by Bek+3, 27 January 2013 - 09:55 AM.


#11 Ice Queen

Posted 27 January 2013 - 10:03 AM

I think you should talk to an accountant and do the sums properly.  Include stamp duty, costs of moving, costs of the private schools, costs of public schools etc etc.

I dont think you should be taking advice about such an important decision from a bunch of randoms who may or may not have financial backgrounds.

PS renting doesnt have to be a horror story.  I have rented for 20years in various cities at various pricepoints and have no horror stories.

#12 axiomae

Posted 27 January 2013 - 10:11 AM

Talk to an accountant - it may work out cheaper to rent when you consider the tax break you get on owning a property you're not living in. Rent money sucks though, I hate to pay it.

#13 *melrose*

Posted 27 January 2013 - 10:17 AM

I would buy, there is no way I would pay $700-$800 a week for rent when I could be paying of my own house.

#14 BetteBoop

Posted 27 January 2013 - 10:20 AM

If you think laterally OP, I'm sure you'll find those 2 choices aren't the only possible ones.

But if these are the only choices you're prepared to consider, then if you're moving areas I would rent first.

Plus, if you rent your existing property out, you will get tax concessions and you won't have to pay private school fees.

Some lessors are happy to sign 2 year lease agreements, provided you allow for rent increases over that time. It works in their favour to ensure a stable tenancy arrangement.

#15 EssentialBludger

Posted 27 January 2013 - 10:26 AM

I don't know. They both sound like crap options to me. ph34r.gif I can't imagine having a $550k debt (even though we could easily service it) OR paying $800pw in rent. ohmy.gif

But if those are your only options I would sell and buy. But I wouldn't want the hassle that comes with an IP.

#16 missy78

Posted 27 January 2013 - 10:34 AM

I'd buy - why pay off someone else's mortgage when you can pay off your own? Just my 2 cents (I am biased though - we just  bought last year after spending years renting. The thought of having practically teenaged property managers telling me what to do is still fresh in my  mind)

#17 Pearlberry

Posted 27 January 2013 - 10:48 AM

QUOTE (axiomae @ 27/01/2013, 11:11 AM) <{POST_SNAPBACK}>
Talk to an accountant - it may work out cheaper to rent when you consider the tax break you get on owning a property you're not living in. Rent money sucks though, I hate to pay it.


Yep, defiantly talk to an accountant. RE: tax breaks, and I believe that the op said the house would be positively geared. Still, and Any depreciation she could claim would be relevant whether she was an OO or renter.

#18 Pearlberry

Posted 27 January 2013 - 10:54 AM

QUOTE (Beetlebop @ 27/01/2013, 11:20 AM) <{POST_SNAPBACK}>
If you think laterally OP, I'm sure you'll find those 2 choices aren't the only possible ones.

But if these are the only choices you're prepared to consider, then if you're moving areas I would rent first.

Plus, if you rent your existing property out, you will get tax concessions and you won't have to pay private school fees.


Yep, look at possible other options. I would rent after making a major move (interstate, overseas) not from moving from one part of Sydney to another.

Not sure where not having to pay private school fees comes from. Unless you mean that the income from the IP would pay for the fees.

#19 #tootired

Posted 27 January 2013 - 11:11 AM

It's a buyers market at the minute...I would buy.

Rent money goes nowhere, at least your paying off a house with repayments.

If it gets too difficult you could always sell one of the houses down the track.

#20 solongsuckers

Posted 27 January 2013 - 11:40 AM

I would buy. I hate renting.

#21 MsNorbury

Posted 27 January 2013 - 11:41 AM

I would talk to an accountant

Buying a house comes with a lot of costs that need to be considered.  There are maintenance costs and things like rates which you don't pay in a rental.  Yes rent will go up, probably more than repayments, but you need to look at how much interest you will pay over the course of the mortgage.

For us at the with moment the rent we pay, although it seems like a lot at first it is less than interest only on a similar house. So while the market is flat in our area we are better off to rent and save the extra money.

I guess when making these decisions t is worth keeping i mind that real estate doesn't always go up in value, and how would you cope if your property was worth less than you owed on the mortgage.

take time look at he numbers in detail, don't listen to things say property is about to boom if they are written by people who sell real estate.

Edited by juliettesmum, 27 January 2013 - 11:46 AM.


#22 NoOneElse

Posted 27 January 2013 - 11:44 AM

There must be more then 1 area to buy or 1 area to rent as options?

I would buy and send children to public school. So start looking in areas with a decent public school and go from there.

#23 Kalota

Posted 27 January 2013 - 03:52 PM

QUOTE (Fluster @ 27/01/2013, 10:11 AM) <{POST_SNAPBACK}>
I'd rent.  You already have the security of your own home to return to.  

We're possibly looking at the same thing in a few years, and I'm in 'camp rent'.


If you already own a property and you're looking for a second, I'd rent IF renting was going to be cheaper. But in OP's case the rent vs. mortgage would be almost identical, so I'd think you may as well buy and have that second investment there!

Like many PPs have said, super doesn't cut it for retirement anymore, I'm seeing my parents struggle financially in their retirement despite owning only one property and having super. Buying will give you even more equity and if the repayments are the same as what your rent would be anyway, it kinda makes sense...

Edited by Kalota, 27 January 2013 - 03:53 PM.


#24 Aimless

Posted 27 January 2013 - 04:58 PM

Thanks for the replies, everyone.

There's definitely a lot to think about and I've booked an appointment with my accountant this week to discuss my options. But I'll discuss in more detail why we're thinking rent is a better option for now.

The area that we live in and the area that we can afford to buy aren't close to amenities. It's far from the city where I work (about an hour's drive) and the public transport is unreliable. There is only one shopping centre nearby and not many clean playgrounds where the boys can run safely around. As I mentioned in my OP, the government schools have a bad reputation and we would have to put up extra money for the boys to attend private schools.

DH and I used to live in the inner west and we loved the fact that we could just walk down the street, grab milk on the way to the park on the corner. Walking around at night is also quite safe. The government schools in the area we're thinking of renting are all good. I know that we still have to pay money for excursion, technology, uniforms, etc. but it won't be as much as the fees in the private schools. Work will also be close and I won't have to fight traffic to and from home.

There is also the fact that we will have an investment property that will pay off our current mortgage, and maybe more. And my accountant has also informed me that we will more than likely get a lot of money back (money paid for council rates, water levy, etc). So even if something happens to DH and I and we won't end up affording paying $800 in rent, we can always move back to this house as the mortgage is quite low.

Another thing is that we can save more money renting (however funny that sounds). We've seen properties renting between $650-$800. If we can find properties less than $800, we can save money, as opposed to paying off mortgage repayments of $800 per week.

As PP mentioned, there are also extra costs for buying and selling property - so we may have to borrow more than $550k.

But thanks for all the advice. I've listed down what PPs have said so I can discuss these concerns with my accountant this week.


#25 Escapin

Posted 27 January 2013 - 05:12 PM

sounds like you're considering all the options OP. As someone who lives in the inner west, I'd definitely be all for renting around here and keeping your current property to rent out.

I think if you only have 2 kids, no pets and no bad rental history, then you should be able to find somewhere great to rent fairly easily.




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