Renting - Costs involved

[bkozican]

GD Board.......How are we all ?

Just a quick question on getting into a rental. What costs are involved. I know there is the bond, which is 4 weeks rent....then another week on top of that. Is there any other costs involved to actually getting into the house.....other than personal assets.

 

[Good Bloke]

GD Board.......How are we all ?

Just a quick question on getting into a rental. What costs are involved. I know there is the bond, which is 4 weeks rent....then another week on top of that. Is there any other costs involved to actually getting into the house.....other than personal assets.

A black Labrador that doesn't chase it's tail and only shits on cement will help

 

[Gough]

Beer and dinner for your mates who help you move your stuff.

 

[bkozican]

Beer and dinner for your mates who help you move your stuff.

Has already been put into the budget

 

[MrNatural]

If you can, i'd say avoid renting at all costs.
Stay at home with the parents and save for your own house.
That's what i did.
Too many people i know who rent, pay the same or more than me weekly and are just paying off someone else's house.
Once you get into the rent trap its hard to come out

 

[MarcusP2]

If you can, i'd say avoid renting at all costs.
Stay at home with the parents and save for your own house.
That's what i did.
Too many people i know who rent, pay the same or more than me weekly and are just paying off someone else's house.
Once you get into the rent trap its hard to come out

In the same quality of house?

'GET ON THE PROPERTY LADDER!!'

Anyway
1. Moving costs - minimal if it's just your mates
2. Bond
3. Utilities hookups if required
4. Furniture/utensils/a bunch of other shit you took for granted when living with your parents then realise you need later. Pots, pans, cutlery, a mop, etc. Again minimal if you can get hand-me-downs or you're sharing with people still.

 

[Good Bloke]

Has already been put into the budget

How much for your mates have you put aside? 2 cartons of West End and all the twisties you can eat?

 

[Smoooothy]

as said above, if you can wait a year or 2, put what you would put into rent into a savings account and don't touch it. you'll have a deposit then.

i've been renting for close to 10 years. it's damn close to impossible (especially when you have a family) to get out of the trap. i'd rather be paying my $1550 a month into a mortgage than paying someone elses

 

[MrNatural]

In the same quality of house?

My house is of better quality and newer than the rental properties some of my mates are in

 

[bkozican]

Cheers for the info....

Would love to buy, but mistakes in my younger years have cost me a good a credit rating. Renting is really the only option atm.

 

[Good Bloke]

as said above, if you can wait a year or 2, put what you would put into rent into a savings account and don't touch it. you'll have a deposit then.

Once you have the deposit, whack it on a pooch at Dapto paying $5-6 and watch your money grow.

 

[Footypie32]

If you can, i'd say avoid renting at all costs.
Stay at home with the parents and save for your own house.
That's what i did.
Too many people i know who rent, pay the same or more than me weekly and are just paying off someone else's house.
Once you get into the rent trap its hard to come out

Depends on the parents and the persons money management skills. I couldn't stay in the same house as my Dad, so had to get out. Also, I dont think I would've been muture enough at 20 to buy a house and manage everything that goes with it.

 

[MrNatural]

Depends on the parents and the persons money management skills. I couldn't stay in the same house as my Dad, so had to get out. Also, I dont think I would've been muture enough at 20 to buy a house and manage everything that goes with it.

Fair enough.
I was lucky enough to be able to live under the parents roof to save up the $ required.
Renting was never really an option for me

 

[kickazz]

If you can, i'd say avoid renting at all costs.
Once you get into the rent trap its hard to come out

Easier to get out of than a mortgage you can't afford!

People can get stuck in the 'rent trap' if they pay overs for rent and neglect to save and or invest money elsewhere. Some choose to rent fo life but then you need to be disciplined with the leftover money. The 'forced davings' aspect of a mortgage can be quietly beneficial.

As for OP - have you got contents insurance sorted out? You might think you are young and don't own shit, but if there were fire/flood/robbery then add up even just the cost of your clothes and you will see it is worth doing.

 

[bkozican]

Easier to get out of than a mortgage you can't afford!

People can get stuck in the 'rent trap' if they pay overs for rent and neglect to save and or invest money elsewhere. Some choose to rent fo life but then you need to be disciplined with the leftover money. The 'forced davings' aspect of a mortgage can be quietly beneficial.

As for OP - have you got contents insurance sorted out? You might think you are young and don't own shit, but if there were fire/flood/robbery then add up even just the cost of your clothes and you will see it is worth doing.

Good point, To be honest I have never even thought of insurance.

 

[MrNatural]

Easier to get out of than a mortgage you can't afford!

People can get stuck in the 'rent trap' if they pay overs for rent and neglect to save and or invest money elsewhere. Some choose to rent fo life but then you need to be disciplined with the leftover money. The 'forced davings' aspect of a mortgage can be quietly beneficial.

As for OP - have you got contents insurance sorted out? You might think you are young and don't own shit, but if there were fire/flood/robbery then add up even just the cost of your clothes and you will see it is worth doing.

Both sides have pro's and con's.
But the fact is, I'd rather have a house that i can own and pay off, then pay off someone else's.
Each to their own

 

[Atley]

Eww no one should live with their parents any longer than they have to. Bring chicks back to your parents place? lame.

 

[bkozican]

How much for your mates have you put aside? 2 cartons of West End and all the twisties you can eat?

A good BBQ and some cold jack daniels

 

[Mofra]

If you can, i'd say avoid renting at all costs.

Disagree.

Crunch the numbers - in the majority of cases, you're better off renting and buying investment properties (as with other assets) than owning your own home.

 

[MrNatural]

Disagree.

Crunch the numbers - in the majority of cases, you're better off renting and buying investment properties (as with other assets) than owning your own home.

Who out there in the general population can honestly afford to rent, pay other expenses, and afford to buy investment properties?
I'd say there would be a limited number.
In my experience, I've found that renting a property costs the same as paying off a mortgage, so why not just buy and live in a house, and if you can afford to invest in other property?
That's my plan for the future.
Live in my current home for 5-10 years, then upsize, and rent out my current home

 

[Mofra]

Who out there in the general population can honestly afford to rent, pay other expenses, and afford to buy investment properties?

Quite a few - myself, and a number of friends.

In my experience, I've found that renting a property costs the same as paying off a mortgage, so why not just buy and live in a house, and if you can afford to invest in other property?

The costs aren't even close - gross yields are below I/O costs in desirable areas (for RP anyway), yet your post indicates P&I repayments which pushes the spread even further.
Holding costs (including funding costs) are generally tax deductible for IPs as well, so on an after-tax basis the spread widens.

The only advantage OP has over IP is CGT exemption - but acquisition costs + CGT discount for assets held > 12 months make a heck of a difference if you've acquired multiple IPs versus 1 O/O property.

 

[MrNatural]

I won't pretend to understand what you just wrote... lol
However, I'm talking from my personal experience and my demographic.
I have found that the friends i have that rent are paying roughly the same, sometimes a bit less, sometimes more than what i pay on my mortgage.
And most of them aren't making big $, therefore can't afford to buy additional properties.

 

[Good Bloke]

Quite a few - myself, and a number of friends.


The costs aren't even close - gross yields are below I/O costs in desirable areas (for RP anyway), yet your post indicates P&I repayments which pushes the spread even further.
Holding costs (including funding costs) are generally tax deductible for IPs as well, so on an after-tax basis the spread widens.

The only advantage OP has over IP is CGT exemption - but acquisition costs + CGT discount for assets held > 12 months make a heck of a difference if you've acquired multiple IPs versus 1 O/O property.

Yer that's what I was thinking.

 

[Scotland]

Renting is underrated.

Realistically I could have bought a house any time from 2007 onwards, ie as long as I've been working full time.

Had I bought the house I'm in now in 2007/8 instead of 2009 I would have had to borrow approximately 15% more than I did based on what the listing for the same property was compared to what I bought it for. So for the sake of an extra year or two of 'home ownership' I would've been paying mortgage rates of 8%+ on a loan $50k+ more than I have now. Way to set myself up for the future!

I rented for two years with friends in a share house. It was far from a palace but was in a good area and ups and downs considered was a worthwhile experience. Gave me the chance to live in an area that I would not be able to afford to buy into and the chance to say 'I'll give this 6 / 12 months and if it's not for me I can bail'. Importantly, it was cheap so I could still save money for a deposit / have a life.

I have friends that are professionals in their 20s and 30s who rent. Some own property, some don't. Realistically for a lot of people even on good money if you want to live in a good area renting is the only option and to many renting near the beach or in the city is worth more than 'owning' a place out in Southern River or wherever. A house on the river so you can canoe each day might be your dream for example but it's no use to you if can only get it at 60 and your back is too stuffed to get out on the water.

For me the biggest motivator for living in my own place is freedom to keep it as clean/messy as I like, renovate, have pets etc. and the security of knowing I can't be punted out (unless I stop paying the bank of course). Financially I'm better off than if I was to rent the same property now but if I put my Kochie hat on the 'best' financial decision I could probably make is rent out the house and live elsewhere.

Anyway, my only tips for renting is if you're sharing to find a place where you have enough space to yourself (ie a tiny 2 bed apartment with one common area would be torture if you couldn't be around the other person 24/7) and treat it like a holiday in that it's a short term thing (6-12-24 months, reassess whenever the lease is up) and pack light - especially if you're young and have the ability to live/keep stuff at home.

 

[kickazz]

I have found that the friends i have that rent are paying roughly the same, sometimes a bit less, sometimes more than what i pay on my mortgage.

Must be an old mortgage or you have a very big deposit to start with. Otherwise that would just be impossible. If someone (like one of your friends, in this example) is starting from scratch, and when I say scratch I'll even throw in a 20% deposit that materialises out of thin air - then the repayments on a mortgage for the remaining 80% would still be higher than rent on the same property.

Long term, that should change in favour of the mortgage though. But starting out, for a given property, renting is cheaper.