Why Renting is Better than Buying a Home | 7 Reasons
Рет қаралды 1,655
Күн бұрынYou've probably heard "renting is dead money" and that you should buy a home because its better, at least you're not wasting your money 👀...
But is that really true?
Of course, there are many pros and cons with renting vs buying a home.
It's all a personal choice at the end of the day. Everyone has different goals and priorities in life. This is the strategy we prefer at this point in our lives and it doesn't mean buying a home is a bad thing. Also, buying a home is different to buying an investment property as well (there are different criterias and things you look for) - the two should not be mixed up!
🤓 Let me know in the comments what your thoughts are on renting vs buying a home?
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Ps. If you have any questions, let me know in the comments!
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// Timestamps //
0:00 - Intro
0:35 - 1st reason (Lower upfront costs)
1:32 - 1st reason (Example of rent vs buying)
2:34 - 2nd reason (Lower ongoing/maintenance costs)
4:30 - 3rd reason (Additional cash flow to build wealth through investing)
6:14 - 4th reason (Flexibility & freedom)
7:01 - 5th reason (Access to amenities without paying for direct costs)
7:53 - 6th reason (Access to more desirable neighbourhoods)
8:30 - 7th reason (Less risk with renting)
10:15 - Downfalls of renting
11:04 - My final thoughts
12:10 - What are your thoughts? / Conclusion :' )
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// Disclaimer //
This content is for educational and entertainment purposes only, and does not constitute tax or investment advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. You should consider seeking independent legal, financial, taxation, or other advice to check how the information relates to your unique circumstances.
@withtheaims 10 күн бұрын
I'd love to hear what your thoughts are on renting vs buying a home, let me know in the comments below! 🤓
@shazdave8886 7 күн бұрын
I own my house outright. Paid off mortgage but didn’t buy in a large city. I would never have rented. Once old and not working I wouldn’t have been able to rent
@withtheaims 7 күн бұрын
Congrats on paying off your mortgage! Renting isn’t for everyone and it doesn’t mean it has to be forever - for us it is part of a wider plan / strategy and it works for us during this stage of our life. We are building out our asset / investment portfolio as part of our renting strategy (moving back home isn’t really an option). The goal is to achieve financial freedom so don’t have to work forever and when the day comes we will look to buy our own home with our investment returns and our own funds as required.
@sunsovisal9342 8 күн бұрын
I rented during my first 10 years in Australia. Recently purchased my first home. I have to say it is the best feeling ever. I never had to stress about rent increase or eviction anymore. I rented 3 bedrooms in my 4 bedroom house and all my mortgage and some of my bills is taken care off. Now all my income can be saved and no longer needed to be portioned or saved for a home deposit anymore.
@withtheaims 8 күн бұрын
Thanks for sharing your experience and congrats on buying your first home - it is a milestone in itself 👏. We all come from different walks of life and the decision to rent vs buy is one that will change over time too! 🙏
@Jaiysful 9 күн бұрын
Can I just add that as a renter, even if u are flexible to move, there is quite a bit of cost for moving. Removalist can be $1k+ or $200-300 per hr. End of lease cleaning can be between $250-$500 depends on u r willing to clean. New place will probably need a light clean, some furniture may no longer fit (shopping), labour required to unpack, need to take days off work that eats into your holiday leave budget. It can quickly add up. And the biggest risk right now is rent is going up anywhere from 10% to 30%. So even if you've found the perfect neighbourhood for your kid's school, you will be eating insane rental increase if you have no other options. Don't buy a house for investment if you don't want the risks that comes with it, buy it because you like it. The mental toll to pack everything, and unpack sometimes is not worth the $$ saved from delaying a house purchase.
@withtheaims 9 күн бұрын
You raise some good points for renting downfalls and I don’t disagree with these costs you mentioned when you vacant a place 🙏. There’s always going to be downfalls with renting (I know I only mentioned 2 but of course there’s plenty more). As mentioned in the video, whether people rent or buy, it’s dependent on the personal and financial circumstances of the individual or families. Another point is not everyone can afford to buy a home / PPOR - the upfront costs are a lot more and take much longer to save up for. Renting for many is the only option as well. I agree rents are rising but so are housing prices. Also to your last point - buying a house for investment is different to buying a house to live in as a home. I purchased my first investment property because the numbers made sense and the data drove me to buy in that state and suburb.
@Jaiysful 8 күн бұрын
@@withtheaims Fair comments. Recently I've seen too many examples where the rent increase is almost hitting that loan repayment mark. Especially if you're living with a partner, then combining that income makes both PPOR and IP instantly within reach. It's a good time to invest, congrats on your IP! I think with the wealthiest gen (boomers) soon to pass down their assets, there will be another influx of people with purchasing power. With that I have a question. Would you choose: A.) all out dream home/masion (by cashing in your IP/other investments etc.) or B.) live very modestly (wayyy below your means) but have passive IP income when you older and retire early with the financial bandwidth to travel frequently and comfrotably
@CliftonHamilton 8 күн бұрын
@@Jaiysful If the price of monthly rent is below the loan repayment mark, you should definitely rent. If you're not saving considerably on your monthly costs by purchasing, then you're losing money on the deal. In the math she does above, the initial payment of $300K out of pocket amounts to $24K a year in lost revenue that would typically be earned from an index fund in an average year. This likely exceeds the amount that would go towards principle in the first year of your new mortgage, and doesn't even include repairs, which is estimated to be 1-4% of the house's value, or between $13-52K per year in the example above. And sure, moving sucks, and is expensive. but it also sucks for landlords- a single month of vacancy will wipeout a year or two of profit- and what happens if the next tenant sucks and doesn't pay rent or trashes the place? You can sue them, but you'll still be stuck with legal fees, and what if they don't have the money to recover? Because of this, rents typically go up after vacancies, and people that have been in the same apartment for a long time will end up paying considerably less in rent than their new neighbors- landlords want to encourage good tenants to stick around (not universally true, but generally true). Additionally, although moving may cost you thousands of dollars for renting, if you own, moving will cost you log factors more- typically about 10% of the value of your home. That's $140K in the example above. So if you make more money and want to move to a nicer neighborhood, or expand your family, or worse, have employment issues that require moving, these just became exponentially more complicated than if you had been renting. Depending on where you live, purchasing doesn't even necessarily give you the security of locking in a reasonable payment for the long term: The UK doesn't have fixed mortgage interest rates, so when rates ballooned from 1% to 7%, some people saw their monthly cost of ownership go up by 2-3 times. This is far worse than renters saw, and honestly just isn't affordable for most people. They're going to be forced to sell at a considerable loss because they can no longer afford their payments, and they'll still have all those pesky moving costs. I own my home. I love my home. I don't discourage people from buying a home if they want a place of their own that they can do with as they please and they can afford it. That freedom is worth the cost to me, even though I would be in a better financial situation had I chosen to rent instead of buy. Homes are about the worst investment you could make, other than crypto or cars.
@Jaiysful 8 күн бұрын
@@CliftonHamilton anecdotally I was in an apartment for 3yrs and on the 3rd year I got rental increase of approx 28% because landlords interest rate has gone up. So it looks like theres a pecking order when landlord refuse to eat the cost of higher interest rate, it gets passed into tenants. And that's a natural move since high interest rate also means people are less likely to afford a home purchase. So you can't really dodge the rising cost just because you're renting.
@nickvdk11 9 күн бұрын
You make some good points. A pro for renting is that money paid on interest on your home loan is dead money so that interest adds up to hundreds of thousands on the lifetime of the home loan. How much depends on the interest rates and how quickly you put extra money into the loan. The down side of renting is that inflation and increased costs for repairs/strata are baked into the rental price. Add to that lack of supply and crowds at rental property inspections being stressful especially when you have kids.
@withtheaims 9 күн бұрын
Agreed and both points are very valid. For the 1st point - this is especially in the case if the home loan or loan on the PPOR is interest only given the principal isn’t being paid off. For the 2nd point - I don’t disagree, it’s definitely tougher when family is involved. Australia needs to build more dwellings in general to solve parts of this problem. Whether it’s renting or buying there’s always going to be two sides to it especially in this type of environment. Renting isn’t for everyone nor is buying, it’s important to factor in your own personal circumstance, financial situation and job stability 🙏.
@phillipg1588 7 күн бұрын
Problems with renting... 1 You're at the mercy of the landlord. If they want to sell then YOU'RE OUT, if they want to increase the rent (and every year they do), then start digging deeper into your hip pocket. 2 You will NEVER own it. 3 Most landlords restrict pets so if you want 10 dogs and 15 cats then you're outta luck. I currently own my own home outright (no mortgage), and it's the best feeling that renters will never have.
@withtheaims 7 күн бұрын
That’s great you own your home outright 👏 . The problems you mentioned for renting have been discussed in my video aside from the pet restrictions. As a renter - the landlords we’ve rented to live in has not restricted us from having pets. As a landlord myself - I don’t restrict pets either. This is situational and depends on the type of property/where it’s located/commonality of having pets in that surburb and local council laws as well. In addition, rents go up but so do interest rates which ultimately impacts home loan repayments. There was a report by the Real Estate Institute of Australia which found the average household spends just under 48% of their income on home repayments. This is a staggering an amount compared to renting which is 30-33% of their income across Australia. Of course you don’t own the place you rent, but the additional funds and money you save can be invested into the share market or put towards buying an investment property. This way you are still building wealth and passive income streams so you don’t have to keep working “forever” or to retirement age. Whether people rent or buy is dependant on many factors and sometimes it’s not always a choice for many people as well, particularly where you live in a HCOL city (high cost of living city).
@JohnnyJohnJon83 9 күн бұрын
I own 3 properties but still rent. I also take advantage of claiming working from home for tax as well. Best way go imho
@withtheaims 9 күн бұрын
Thanks for sharing and love to hear others are also rent-vesting too! 👏👏
@anubizz3 7 күн бұрын
Yeah renting the room from your parent and buy investment property is the best option... even better if your parent just ask you to pay for utility bill that you use..
@withtheaims 7 күн бұрын
Yesss living at home can definitely help save more esp when costs are very low and using these funds to buy investment properties 🙌.
@Herbert12864 7 күн бұрын
Buy a house. Look at the haves versus have nots in the housing market.
@YourNameYourSoul 8 күн бұрын
Renting ftw for flexibility. Invest in crypto on the side
@withtheaims 8 күн бұрын
The flexibility is a key one for us too! I don’t invest into crypto anymore because I don’t have that level of risk tolerance but it is another form of asset / investment for many too!
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