16 Jan Renting vs buying property: you can do both
For decades people have argued “rent money is dead money” and as such most people have pursued the dream of owning their own home. However, rapidly increasing prices within Australia’s major cities have seen this dream become increasingly difficult, and for some out of reach. In fact, some have replaced their desire to own a home for living in the moment with travel and experiences.
Regardless, I believe there is little debate and that without a doubt rent money is dead money. To put it simply, it is little more than funding another’s future to ensure you are no more than a short walk from your favourite coffee shop. Sitting and sipping, whilst watching your ship sail further from the shore, never to return.
Whilst your bank pre-approval may not allow you to purchase within 20 kilometres of your favourite establishment, this shouldn’t stop you from buying rental real estate further afield. The rent you could potentially collect will off-set the rent you pay and the asset you obtain will ensure the next time the property market booms you will not be left stranded.
In the Sydney beachside suburb of Coogee, an older two bedroom apartment near the beach will cost you $1,600,000 to buy or $900 per week to rent. In the South-West Sydney suburb of Liverpool, it will cost you $580,000 for a brand new two bedroom apartment, on which could collect you $480 per week in rent. For those who can save to borrow 80%, the Liverpool property will pay itself off!
If you factor in the tax savings new properties can offer and your tax rate, you will have more money in your pocket by owning a property than simply renting. Debt is something nobody happily dives into and for years it has represented the inability to live it up, travel or freely spend. However, this is not the case if you invest wisely, and because of this, for many the question is no longer should I rent or buy, but, where should I buy whilst I rent?