To Rent or to Buy?

decr on 25/09/2017 - 12:12

Hi all,

I can't decide, please help. I find myself in a sad place of having to sell my home due to separation and can't decide what to do as everything is so uncertain. I currently have a 230m2 house with just myself and my son living in it which is way too big for us anyway so getting rid of it isn't an issue.

So the question is, as he goes to school right next to my work, would you rent (so we could walk to school/work) or buy further out? Our current commute is around half an hour each way to/from home by car. I can't afford to buy near that area so I'm stuck with renting or moving further away. I personally hate renting and prefer owning my house, I've bought and sold several, but the stamp duty charges at 4% (from memory) are a bit too high to keep up with that trend if we're not going to stay there very long.

This is in Hobart so any locals reading this please chip in what to look out for with either renting or buying. Looking at renting in Sandy Bay and buying around Kingston/Blackmans Bay. Not looking for anything huge, but either temporary or a semi-permanent solution.

Thanks

Poll Options

  • 28
    Rent
  • 6
    Buy
  • 0
    Other, described below
Home & Garden

Comments

  • Zaenille on 25/09/2017 - 12:35
    +5

    what to do as everything is so uncertain

    Rent. When everything is uncertain, why lock yourself down already? Rent for a few months, stabilize, see how you go after that, then reassess.

    • decr on 25/09/2017 - 12:42

      Thanks,

      that's what I am thinking as much as I hate the idea of paying off someone else's mortgage. Although after living in a sizeable house moving costs become a factor too unfortunately, so it's not like we can move every couple of months.

      • Orpheon on 25/09/2017 - 13:51
        +5

        Don't worry about whose pockets you are helping to fill, all you need to know is that your money is being used to house you and your son.

        I like the idea of rest-vesting - buying where you can afford and renting where you need to be.

        • decr on 25/09/2017 - 13:59

          Noted, thanks.

        • v2 on 25/09/2017 - 14:29

          I was going to suggest the same - rent where you like to live and buy where you can afford.

      • Morien on 25/09/2017 - 15:48
        +1

        Renting equating to throwing your money away is a bit of a BS lie spun in Australian culture. In fact, in many other places it is the reverse, the thought of buying is considered a fool's game. Costs and Pros can't be seen as just money either. The ability to walk to work and school to save on petrol, the ability to uproot yourself at a whim in times of uncertainty, you see it isn't so simple as people think.

        In the end, do what is best by you, they are both valid options.

        That says, I'd rent if I were you.

  • Donaldhump on 25/09/2017 - 12:38

    given your situation, maybe renting and just chilling for a bit is a good idea..owning a place isn't everything in life, be happy and free for a bit.

    • decr on 25/09/2017 - 12:43

      Thanks for your comment, appreciated, but you're never happy and free with small children and a looming divorce process.

      • Donaldhump on 25/09/2017 - 12:53

        well the divorce will be tough i am sure, but it will have an end date, my best mate got divorced and was a mess for a year or so, especially when his wife met another dude…. fast forward 5 years he is with another woman, happy as can be….

        • decr on 25/09/2017 - 13:07

          Heh yeah that's a happy outcome. My ex left with another guy it seems and left me with both kids to look after on a 4 hour notice 1.5 years ago (after 10 years or so) and then a year later the barrage of lawsuits etc began. I hope to get there one day.

        • Donaldhump on 25/09/2017 - 13:57
          +3

          @decr: you got two kids which i am sure you love to death… what your ex did is beyond appalling, you are the better person, stay strong, you will be the one to smile at the end of it all .

        • tryagain on 25/09/2017 - 17:14

          @decr: If she can just up and leave her kids, she isn't the sort of person you want in your life. So you have one each now? Why don't you have a chat to your son and see what he would like as well?

        • decr on 25/09/2017 - 17:20

          @tryagain: That's the killer, he doesn't want to move and that's outside my control now unless I win a lottery or something.

        • tryagain on 25/09/2017 - 17:36

          @decr: I really feel for you, but I have seen the struggles some single parents have gone through raising their kids to eventuate in an amazing bond being formed. I'd still try to include him in the decision, point out that it just isn't possible to stay but that he can have some input in the next chapter.

        • decr on 25/09/2017 - 21:28

          @tryagain: Definitely. So from there comes the question to buy or rent, whether close to school/work or closer to his girlfriend (ooh!). He is a very astute 7yo. I'm leaning towards the rent option as much as it will annoy me but would make life easier in the short term.

          Forming a bond isn't an issue as it is already there and I would not have it any other way. :)

  • dasher86 on 25/09/2017 - 13:17

    Rent Vest.
    Buy in burbs rent where you want to live

  • citygal on 25/09/2017 - 13:32
    +1

    Rent is better, given your situation is uncertain. Buy later when you have a clearer idea about the future.

  • mysterytal on 25/09/2017 - 14:00

    I would rent. If you don't want to be kicked out "in a matter of months" then sign a longer term tenancy with a professional landlord….i.e not a mum and dad investor with just one investment property who could sell at the slightest sign of trouble in the market.

    I have usually found renting is cheaper than owning. Council rates, water rates, home insurance and home maintenance expenses are included in rent.

    The figures I use to compare roughly is if the weekly rent is less than 1/1000th of the value of the house then you're going to save by renting and if the rent is higher then it could be cheaper buying.

    • decr on 25/09/2017 - 14:07

      The dilemma of renting is cheaper than owning is that you're practically throwing money at someone for the privilege of living at their place. I'd rather own my next home but I'm not sure if it's feasible so fishing for thoughts.

      • mysterytal on 25/09/2017 - 14:37
        +2

        So you won't be getting a mortgage and practically throwing your money towards a bank for the privilege of borrowing money.

        If you have the money on hand and are buying you are foregoing investments returns which can easily cover the rent and can very easily be liquidated if required.

        If I were to buy a house again I would be buying it for the long term….i.e more than 10 years so the stamp duty, buying and selling costs can be amortized over a reasonable period of time and not be such a burden. Keep looking for a house to buy whilst renting and one day you will find a house you will want to live in for a long time then buy that one. I wouldn't buy anything just to be a home owner.

  • mskeggs on 25/09/2017 - 14:02

    I'm not a local, but there are plenty of low price areas in Hobart, though not Sandy Bay obviously.
    Over the bridge, or west in Glenorchy, or Kingston as you point out.
    I voted rent, but would be a little concerned Hobart could see substantial price growth in the next few years without prices getting to the silly levels of Sydney/Melbourne. It would suck if you rented for two years and discovered property prices grew $100k.
    I don't think Hobart has the risk of downside visible in some of the mainland capitals.

    • decr on 25/09/2017 - 14:27

      Thank you, most appreciated.

      I'm currently in the Glenorchy region but won't stay here so I suppose the question is still whether to rent close to work/school or buy further out. The price hike is also a worry which is a part of the equation as well.

      If you were a single parent with an average full-time job, with constraints for taking the kids out of the state, would you change your vote?

      As far as I can see I'm stuck here which makes this difficult.

      • mskeggs on 25/09/2017 - 15:26

        I'm risk averse, so would like the security of a house.
        The lifestyle of school and work close together makes it desirable to live nearby too, but in my experience when you set that up, invariably something changes (you lose a job, or a great new one comes along, or the kids wants to go to x different school when they move to high school or something).
        Would it be possible to keep your existing residence and rent it out, but rent a smaller place closer by?

        • decr on 25/09/2017 - 17:23

          Unfortunately not as the other party has decided not to generate income and wants the property sold or will take me to court over it. Also costs would outweigh returns so it's not feasible. Thanks for the suggestion though.

  • decr on 25/09/2017 - 14:25

    Edit: stupid phone.

  • swapsey on 25/09/2017 - 15:33

    I agree with others…. Uncertainty = Rent.

    Of course there is the old maxim - "you should rent where you've always wanted to live and buy where you can afford" (investment).

    And of course you could always buy bitcoin :-)

  • shaz0316 on 25/09/2017 - 16:22
    +1

    Hi mate!

    I'm a local, used to live in Sandy bay until jan this year when I bought a house and moved to blackmans bay. Work in the city and commute times are about 20mins on a normal day.

    Was in a similar situation as you- sandy bay is very expensive so bought in the suburbs. Good thing about buying in kingston area is getting a buyer is easy if you decide to sell so is recommend if you could buy then do so.

    Good luck

  • Word on 25/09/2017 - 16:26

    Buy where you can afford. Rent where you want to live.

    In other words build up your capital profile by renting out the houses you purchase and just rent.

    • decr on 25/09/2017 - 21:43

      That will be quite hard as a single parent with a full time job. Thanks for the comment though.

  • Euphemistic on 25/09/2017 - 21:28

    Another vote for: Rent + buy investment.

    If you rent and then buy where you can afford, make sure you would be happy to live where you've bought. If the rent thing goes wrong, or the situation changes then at least you have a fall back option that will suit you (even if it is a 30min commute)

    • decr on 25/09/2017 - 21:33

      Well that's another angle I suppose. I moved to Tas just shy of 2 years ago, have no friends or family, full-time work single dad trying to make sense of all this. I would keep my current house if I could afford the payout but I can't. The commute isn't the problem, I guess what I'm trying to get at is whether it's worth paying high rent and close to everyday business or going on buying something further away.

  • Stewardo on 25/09/2017 - 21:31

    Buy where you can afford, then rent it out, rent one where you wanna live

    • decr on 25/09/2017 - 21:42

      I don't have the capital for that unfortunately due to separation and the legal system favours mothers, people who do not report their income or choose not generate any (but still are entitled to spousal support) and get free legal aid.

      I love living in my own house that I own, going back to renting just seems so backwards. :/

  • [Deactivated] on 26/09/2017 - 08:28

    Then buy.
    Rent money is dead money.

    • decr on 26/09/2017 - 08:33

      I know and really want to, but getting cold feet whether it's a good idea at this stage. Sure, I can always sell it but lose on the stamp duty. The duty for my current house was $14k and I'd be looking in the similar price range (~400k).

  • HeWhoKnows on 26/09/2017 - 10:07

    Mate. You are asking something very personal of us. YOU need to figure this out for yourself as everyones circumstances are different. Nobody can take your place on this one. Just write down all the good and bad things (separate lists) about each option and weigh it up. You could even assign points for importance. It will quickly become apparent which one is your best option.

    • decr on 26/09/2017 - 10:31

      Hey thanks for the reply. I have done this and still can't make up my mind, that's the reason for the post. After being with someone for 10 years and now going back (with dependants) feels really weird. My first pick would have been able to buyout and keep the house, but that's not an option anymore. My preference would be to buy, but I'm hedging with the permanency and cost involved.

      I'm not looking for an answer from you guys, just opinions and experiences, maybe some angles I haven't thought of.

      Thanks

      • HeWhoKnows on 28/09/2017 - 18:14

        Maybe some of the suggestions here can be added to your lists or help with the weightings.
        You can always rent until you decide otherwise.
        Renting is always a good temporary option.
        Just take a lease for 6 months.

  • srpeel on 26/09/2017 - 11:35

    Let's say
    House value = 500,000
    - Mortgage = 200,000
    - Cost of sale= 30,000
    - Moving, legal= 5,000
    Net = 265,000
    Div * 2 = 132,500

    Can you afford 135,000 tagged onto your mortgage?
    Rework to the actual figures.
    If you have the kids and she doesn't fight for custody (difficult because she has already abandoned them once already), Social Security/Court will charge her for maintenance (probably her next step will be to sue for custody - see a lawyer NOW). See what some professional advice is before you do anything else.
    Good luck

    • decr on 26/09/2017 - 13:12

      Thanks for the reply. In short, no so I have to sell. She abandoned them for a year then went through courts to get them back. Doesn't work / generate income of course, gets legal aid where as I'm left with lawyers bills, school fees etc. Oh and have to pay her child support as she pretty much kidnapped my daughter and there's nothing anyone is willing to do about it from child protection to law enforcement.

      I've spent over $7k in lawyers so far.

  • srpeel on 26/09/2017 - 14:59
    +1

    Then another alternative is to sell the house, invest the cash in stocks or hide it in gold or Altcoins and rent somewhere close to where you work. Investing in property only works if you expect capital gains which is the same as the other options but it is less liquid.
    Don't expect much in the way of profit from the rental itself and negative gearing only works if you're losing money (which you would be if you have to get a bigger mortgage) but the ATO will slug you for capital gains if you negatively gear and rent for more than 7 years without occupying the property.
    All of it has some risk so you need to decide how much you are willing to lose if it all goes pear-shaped. You could check out some of the investment advisories (e.g.Port Phillip Publishing or other like it. Some of them seem to have some steady results (by steady I mean you will win some, lose some, but overall make a profit, especially if you have a decent amount to invest).
    If you've gone this far using lawyers and not been able to win, then accept that you are never likely to and stop paying them more money. Hide what you have and don't give them the opportunity to bleed you dry.
    Sometimes life just sucks.

    • decr on 26/09/2017 - 19:33

      Thanks, the way I see it the real risk is the stamp duty and fees for selling if I had to in the short term. Lawyers are inevitable as there are property and kids matters to be resolved which are separate things.

      I'm not in a position to invest so that's out of the question. And yes, life sucks at the moment.

  • [Deactivated] on 26/09/2017 - 19:03

    Or buy a house in NZ and take the family there

    • decr on 26/09/2017 - 19:24

      I can't even take them out of the state without consent.

  • [Deactivated] on 26/09/2017 - 21:44

    Move to the west coast mountains then ,
    and buy a banjo and a wind turbine

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