Will you buy or rent at this time?

Check:

https://www.reddit.com/r/ausfinance

Great threads on topic almost every day ;)

So it is often a numbers game. How much is your rent? Could you get a house you like for the same money? In my case the last time I rented, the rent was nearly equal to a house payment but was almost half the size. The apartment was TOO small. But with a house you have other costs - repairs - which are not seen with the apartment.

A common argument is at least you are not throwing your money away. Well some usually is as it goes to interest and taxes. As such I recommend you get a serious spreadsheet out and compare the numbers. In all likelihood, if you go for a house the size of your apartment it will be a major gain to buy.

Two warnings:

1) a house kind of ties you to a location. In an apartment you can move to Brisbane or Hobart easily.

2) realtors try to over sell you. Decide exactly what your limit is. Make it a hard limit. One cent over is definitely too much. And hold to it. Realtors seem to use some odd logic to get you into a housing crisis. And it always makes good sense at the time. Or only defense to their spurious logic is to have a fixed limit - I would say if it is even a penny more then I would not be able to sleep at night with worry.

I bought my first house in 2006 just before the peak. I sold 3 years ago for less than I bought. But if I consider what I would have paid in rent for equivalent standard of living, then I broke even or maybe even a little ahead in total cost. However a BIG difference was that a significant portion of that expenditure became equity. So I was able to grow wealth rather than grow someone else’s wealth.

If I were to do it again (for the first time) I would:

- go out to dinner less and save more of that money (nothing to do with home ownership, but I could have hosted more at my HOUSE)

- perhaps bought a little less of a house or bought a 2 family and rented the other unit.

How stable is your life?

Are you in danger of losing your job? (ferinstance) In that case you may need to move suddenly to another part of town or another state, or even (worst case) another country.

In this situation, you are far better off renting because that gives you more flexibility, as you don't have the hassle of having to wait until you sell your house before you can move.

Conversely, if your life is stable, you don't have a mortgage but your income ebbs and flows, you are better off if you own your own home. In times of low cash flow, it can be used as collateral to borrow food-money temporarily.

I decided to buy almost 25 years ago. Now, I have my own home, with land, and no mortgage. Because that is the real choice... not what is best for you today. But in 25 years, do you want to be living on freely owned property, with minimal bills? Or do you still want to be paying rent to someone else?

There are legit arguments both ways... the numbers are not vastly different in the long run. But I am thrilled to have front-loaded my living expenses, so that I now am looking at a smaller burn rate of expenses during my retirement.

https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal...