First Time Home Owner: Something Is Missing

ratoloko on 28/05/2025 - 09:59

Hi all,

First things first:

I have said that I have no plans in buying a house here.
What I know about the process could be incomplete, wrong, biased or everything I just said together.
We all have been wrong at least once in our life, it is not different now.

The reason why I am posting this is because I keep hearing that right now it is cheaper to pay a loan than a rent, I keep seeing this everywhere but it seems too good to be true.

Right now I am paying $800 pw, I know it is a lot and I am planning in leaving the "city" for good once I have sorted out my job. I am okay with regional areas like Wollongong.
I was looking for cheaper rent but let's use the $800 pw for reference.

Now, $800 pw is $3.4k monthly.

REMEMBER: TAKE EVERYTHING BELOW WITH A GRAIN OF SALT!!!

A $600k house which is something I don't think it even exists but just for the sake of this talk:

30-Year Mortgage at 6% Interest
Monthly payment: About $3,992

I have no idea if the actual interest rate is higher or lower than 6%
I know that people keep moving from one bank to another chasing the cheapest, I have no clue.

Now, if I can afford 20% payment for a $600k house and avoid all the insurance fees when you cannot afford that, the monthly payment drops to about $2,878 monthly.

Of course I don't have 20% for a $600k house right now but if I waited until now, I could wait a tiny longer.

I know based on the news when the interest rate skyrocketed that people could not longer afford to pay the load so now you have no money and no house which is the main reason I said I have no interest in buying a house.
You cannot predict the future, job loss, etc, even IT field is a complete mess right now.

Based on everything I just said, the numbers do not add up.
I am pretty sure you have to pay tax for your house like everything else here in Australia, and other hidden costs so 30-Year Mortgage at 6% Interest with a monthly payment about $3,992, will easily reach $5k

I am a DIY club member but still, there is so much you can do without requiring a professional, not to mention that houses are being built like card so there is a high risk of buying a lemon and from what I have seen, if you bought a lemon house there is no law protecting you here. You are fully fked!!

What I know about the process could be incomplete, wrong, biased or everything I just said together

What are the things you wished you knew before you started the 30 years journey??

Thank you very much

Financial

Comments

87percent on 28/05/2025 - 10:03

+4

TL:DR… but your post sounds like a precursor to "some awesome book you've read written by (insert your name here)"
- ratoloko on 28/05/2025 - 10:05 Comment score below threshold.
  - marcozmitch on 28/05/2025 - 14:57
    
    +1
    
    It has always been cheaper to buy rather than own. Other hidden/unrealised fees/financial considerations etc,(others do discuss below) .. in home owning, costs do include things like property insurance, yes-council rates, but not $3000 a year (that is not an impossible figure, but on the high side).
    Supply charges on gas/electricity/water.
    Cost of maintenance, risk of natural disasters in some areas of Australia.
    Flexibility on your fiances, as committing to a loan is a long term thing and does tie up your money.
    The risk of the market value falling below the actual value of the house, (so even though State and Federal governments do have policies that encourage/or give tax breaks that fuel property ownership.), they will always make sure they never flood the market with too many community/social houses or release more land than the market can take. Like slicing the Land cake thinly.
    Also remember that in many parts of Europe, as land is in such short supply, people do need to compromise and live in apartments. It just is, as really large empty land is employed in growing food etc., large unused swathes not able to be used for farming, may serve other purposes, but may not be suitable for housing either.
    Perhaps 95 to 98 percent of the time there will be a * NO * property market collapse. But it can happen very occasionally.
    So, demand on property levels will be increasing most of the time and any government intervention, must happen without reducing the existing value of property…
    Australia has a massive shortage on the available houses and even finding a rental in many (desirable) parts of Australia is a challenge.
    Of course in many parts of the world, politics and war like in Ukraine, in Africa and other places can dramatically change that situation.
    But will never likely happen in Australia.
    
    So right now would be better changed to always.
    In considering all available, current facts, current circumstances and likely scenarios, in Australia, owning will always be better for may reasons.
    Also as an investment, property as an asset class will go up (like other asset classes), when the stock-market falls or interest rate charges become lower etc,.
    - Dr Phil on 29/05/2025 - 09:31
      
      "It has always been cheaper to buy rather than own"
      
      In the short term, maybe NO - depends on economy, interest rates, property prices, rents and financial circumstances
      
      However..
      Yes, always in the long run because the principal on the loand gets paid down over time, the value of your home goes up over time, and so do rents!
    - welcomeUniverseWorld on 01/06/2025 - 07:56
      
      Mate , you wrote a lot
      
      In short it is least likely for an average property to go under a purchase price over time.
  - Meconium on 28/05/2025 - 23:06
    
    +2
    
    crystal clear about of why my POV.
    - Some Guy on 29/05/2025 - 14:01
      
      Yes but there's isn't clear cannot.
  - SlickMick on 29/05/2025 - 12:11
    
    +2
    
    You answered your own question.
    
    Yes, you need a 20% deposit. Then it's cheaper to own.
    Also, remember that you'd expect rent to rise, right? Whereas interest rates could decrease.
    After 30 years, your repayments are $0 (obviously there are other costs besides the loan though), but what would the rent be by then??
MS Paint on 28/05/2025 - 10:14

+10

I keep hearing that right now it is cheaper to pay a loan than a rent

From whom?
- Protractor on 28/05/2025 - 10:16
  
  +1
  
  See below (The Voices In My Head) Track 10
- mskeggs on 28/05/2025 - 10:16
  
  +11
  
  The real estate industrial complex.
- ratoloko on 28/05/2025 - 10:20 Comment score below threshold.
  - MS Paint on 28/05/2025 - 10:35
    
    +5
    
    folks kept saying that I am paying somebody's else loan and I could pay the load myself.
    
    This is nothing new. It has been this way for the last 100 years.
    
    Rent has always been dead money.
- supersabroso on 28/05/2025 - 13:27
  
  It's definitely cheaper to pay a loan than rent in many circumstances from the perspective of comparing the interest only vs rent as they are both "dead money". Eg. A comparable $600k house costs you $800/week to rent. However, if you took out a $480k home loan to buy the house, your interest to the bank starts at around $500/week, this figure gets lower and lower over time whilst your rent goes higher and higher over time. In addition to this, you get 100% tax free capital gains on your property value going up. As such, you'd be completely silly to rent if you can avoid it. Lastly, many home owners can pay back the loan in 10-20 years.
  - TheFreaK on 28/05/2025 - 16:07
    
    +8
    
    Don't know where you're seeing 600k homes for $800P/w rent but I'd love to invest
    - gezza90 on 29/05/2025 - 14:09
      
      +2
      
      My exact thought. If we're targeting the ~2-2.5% rental yield, $800/week rent is common for $1.2m properties, not $600k.
  - tenpercent on 29/05/2025 - 16:06
    
    +1
    
    Ignoring the opporutnity cost of investing the money in ETFs or any other investment.
- DashCam AKA Rolts on 28/05/2025 - 14:47
  
  +1
  
  REA, that's whom.
- Dr Phil on 29/05/2025 - 09:39
  
  -1
  
  Right now:
  You can rent a house for about 3-4% of its value.
  You can rent a unit for about 4-5% of its value.
  The only deposit you need is 4 weeks bond
  
  To buy a property you first need 20% deposit and does OP even have that in place?
  Then you must find a bank to lend you the other 85-90% (includes other costs such as legal, stamp duty and more) and pay over 6% interest on the loan.
  
  Somehow I dont think Op is hearing things right nor done the maths
Protractor on 28/05/2025 - 10:15

-4

What are the things you wished you knew before you started the 30 years journey??

That is was OK to be greedy and hoard a few extras, so that by now I could be raking in $2400 a week. Smirking as I drive past the homeless in my Beemer, listening to Dennis Leary on my $5000 high end car infotainment system.
geekcohen on 28/05/2025 - 10:17

+5

What about rates? Your $800 weekly rent covers the mortgage, plus things like council rates, which are typically lets say, $3,000 per year (though this varies by suburb and property). It’s important to factor these additional costs into your workings.

Another key consideration is growth. While the rent is what it is right now, the real objective is to own a property that will appreciate in value over time. Renting, on the other hand, means you’re likely to face annual rent increases without building any equity. Owning a property might mean your payments fluctuate, but over time, you’ll benefit from the property’s value growth.

In almost 5 years, I have had about $150k growth in our property compared to what we paid for it. Yes, our mortgage went up due to interest rates, but it is still cheaper than renting, and we have had that growth.
- ratoloko on 28/05/2025 - 10:24 Comment score below threshold.
  - geekcohen on 28/05/2025 - 10:28
    
    +6
    
    If you pay stuff monthly it makes it easier to manage. We pay our rates and all our bills monthly to avoid "bill shock" and no "oh, I need like $3k to pay rates now". Just helps with budgeting. That what we find works best for us.
    
    If you can buy a home, then definitely do it because you get the growth and get into the housing market. Yes it can be tough at times, but it is great to call something your own as well.
    
    We have rented multiple homes and it is great to finally have our own. No worry about rental inspections, rental increases or owners selling the home, and we need to find a new place, able to put things like TVs on the wall and do whatever modifications we want.
    
    Thats just my 2 cents.
    - ratoloko on 28/05/2025 - 10:40
      
      If you pay stuff monthly it makes it easier to manage. We pay our rates and all our bills monthly to avoid "bill shock" and no "oh, I need like $3k to pay rates now". Just helps with budgeting. That what we find works best for us.
      
      Yup, I agree with that. Monthly payment is always better.
      
      No worry about rental inspections …….. owners selling the home……. able to put things like TVs on the wall and do whatever modifications we want.
      
      Ohh man…… "sighs"
- TEER3X on 28/05/2025 - 10:48
  
  Growth really only matters for investments other than ppor, unless you plan on downsizing at some point or downgrading, or your lvr is less than 20%
  - geekcohen on 28/05/2025 - 12:18
    
    But even your PPOR is a personal investment. You always want growth. We have had growth which will allow us to move up into our next place which is bigger and better than our current.
    
    The growth isn't always about making money to put back into your pocket as per say, it is about getting growth and making money to put into the next property.
    - pscac001 on 28/05/2025 - 13:35
      
      +5
      
      This only holds if the bigger and better place hasn't had the same percentage growth.
      
      If smaller properties constantly grew in value at a faster rate than larger ones, then eventually they would cost the same, that's clearly not the case so the bigger and better place must be growing at at least a comparable rate.
      
      If a $500,000 property and a $800,000 property both grow by 20%, then you have $600k and $960k properties and your upgrade cost goes from $300k to $360k.
      - star-ggg on 28/05/2025 - 14:28
        
        +1
        
        @pscac001: You could get lucky and be in an area that outperforms the average. Could also get lucky winning lotto.
        
        pscac001 on 28/05/2025 - 15:10
        
        +1
        
        @star-ggg: Yeah, there are definitely a few lucky ones out there, and I wouldn't be surprised if the odds are decently higher than the lotto.
        
        But as a general statement "you always want growth so you can buy a bigger house later" is horse shit.
      - TEER3X on 28/05/2025 - 17:56
        
        @pscac001: They could also be referring to an investment property as their next property where equity in ppor would be useful?
        
        I have no idea, not an investor, just guessing at this point.
- DoctorCalculon on 28/05/2025 - 21:35
  
  $3,000 per year
  
  Also, don't forget you also have to pay for the service fees for your Water Authority as the property owner.
  - geekcohen on 29/05/2025 - 06:27
    
    Yes, Water Rates. They are usually included in your bill though, at least ours is. So that comes into the monthly payment of each bill.
- Nebargains on 29/05/2025 - 06:24
  
  In almost 5 years, I have had about $150k growth in our property compared to what we paid for it
  
  It might also do nothing for the next 5 years or could also go backwards. Not that the equity matters much for us but our current house was up about 40% in about 3 years after buying. Then property prices plateaued and then declined in our area and stabilized for several years until late 2021 early 2022 when prices went nuts again and we were up 70% in less than 10 years, now sitting at more like 55-60%. But what is it good for? It isn't like we can 'upgrade' to a better house because everything else also increased in price too. But I agree with the sentiment, if you pay a mortgage for 30 years you own the house, if you pay rent for 30 years you're still renting.
  - geekcohen on 29/05/2025 - 06:28
    
    Was purely an example, but yes, lots of variables.
    
    If the house goes backwards in value or the mortgage is reduced as a renter, does the rent go down? Probably not. So there is that to factor in as well.
- rumblytangara on 29/05/2025 - 08:43
  
  In almost 5 years, I have had about $150k growth in our property compared to what we paid for it.
  
  What would have happened had you dropped the same amount of money into an ASX ETF over that five year period?
  
  I've looked at the skyrocketing house prices around me, and then realize that the hundred+ thousand dollars they appreciate every year comes to around single digit % growth. Fairly comparable to historical stock market returns.
- sareth on 29/05/2025 - 11:03
  
  What does that growth get you? Nothing, because if you sell it to "achieve" that growth, you're just going to turn around and spend it on the next place, which has also grown.
star-ggg on 28/05/2025 - 10:20

+13

It seems like you are afraid to buy a house because of a lot of "what-ifs". Yes, it is prudent to understand your risk but what do you think will happen if all your "what-ifs" occur when you're renting? You'll be left homeless as soon your landlord can turf you out and you're left trying to find a new rental with no job. If the worse happens with a mortgage, the bank will actively work with you to keep your house. They can put you on interest only or waive the repayments by increasing the loan.
- ratoloko on 28/05/2025 - 10:25
  
  -4
  
  So are you saying that they won't just take it away and good luck mate??
  - star-ggg on 28/05/2025 - 10:28
    
    +11
    
    They're not as ruthless as landlords because a bank isn't interested in holding and dealing with property. Their whole business is all built around moving money not physical assets. They rather you get back on your feet and start paying them the interest again than having to possess and sell you property.
    - ratoloko on 28/05/2025 - 10:42
      
      +3
      
      This is new, I thought they would just kick your butt and adios.
      I am glad I posted here, the few that took my post seriously, helped like they would not believe.
      
      Thank you very much
      - ratoloko on 28/05/2025 - 11:13
        
        -5
        
        @ratoloko: People prefer to down-vote a complete normal comment rather than add something to it.
        The beauty of the internet.
cashless on 28/05/2025 - 10:20

+1

Something Is Missing

Yes, the income that you would receive from renting out your 1 or 2 spare rooms to tenants
- ratoloko on 28/05/2025 - 10:26
  
  +1
  
  I have shared house a decade ago, it is not something I plan in doing now.
  I know some people would have no problems with that, nut not me haha
mskeggs on 28/05/2025 - 10:21

+4

If you want to own a house, then buy one you can afford given repayments will limit your lifestyle.
Your posts sound like you aren't ready to settle down anywhere for a few years, but if you are it is much nicer to own a home than be a tenant.

That said, it is also great to be able to call the estate agent when there is a leak in the roof, and to give a few weeks notice and move elsewhere if the mood strikes you.
- ratoloko on 28/05/2025 - 10:29
  
  Your posts sound like you aren't ready to settle down anywhere for a few years
  
  I wanna set around a regional area wit lots of nature and far away from city and chaos.
  
  it is much nicer to own a home than be a tenant.
  
  No doubt, you cannot even have arts on the wall coz you will have to paint before leaving.
  
  That said, it is also great to be able to call the estate agent when there is a leak in the roof, and to give a few weeks notice and move elsewhere if the mood strikes you
  
  That is how I got where I am today, the landlord didn't wanna fix mould issue, a chat with Fair Trading and I was out with my bond.
- marcozmitch on 28/05/2025 - 15:21
  
  -1
  
  "That said, it is also great to be able to call the estate agent when there is a leak in the roof, and to give a few weeks notice and move elsewhere if the mood strikes you."
  These days sensible landlords/property managers (and in the tenants interests too-to keep the tenants happy), will prefer to set up a lease and try to not charge so much rent that people want to move elsewhere.
  Also governments have be moving to increase tenant rights, like allowing tenants to have dogs etc.
  - Grunntt on 29/05/2025 - 12:02
    
    Also governments have be moving to increase tenant rights, like allowing tenants to have dogs etc.
    
    Pretty sure there's currently only one or two states that permit a landlord to unilaterally ban pets.
Some Guy on 28/05/2025 - 10:24

+11

What are the things you wished you knew before you started the 30 years journey??

Twenty years ago, when I started my "journey", I wish I knew that $400k for a two bedder within walking distance to Bondi Beach was not a bad price and that someday $1m would barely get you into a suburb like Blacktown.
- ratoloko on 28/05/2025 - 10:31
  
  I know the feeling :(
  
  I believe the gov at some point was helping first time home owners like you deposit X and they Y, but this was ages ago when I had no conditions at all to do anything.
ihbh on 28/05/2025 - 10:27

+5

You are correct.

Basically the current rental yield (net rent/price) is around 1-3% p.a. Interest rates are around 5% p.a.

The only reason people buy is in the hope of capital gains, say 4% p.a., which might bump total returns above the holding cost. And we've had lots of capital gains for many years, but so did Japan and China, and then capital gains fell off a cliff, went sideways for decades. When that happens, late buyers will be regretting their decision.

PS: I'm unbiased because I'm an early multi-buyer, so whether prices fall off a cliff/go sideways for decades won't affect me.
- Fredfloresjr on 28/05/2025 - 10:34
  
  THIS
- ratoloko on 28/05/2025 - 10:35
  
  +1
  
  I am thinking about this now while in my middle 30s coz we cannot work forever and it looks like that having no house when the time arrives will drag you to hell.
  
  I asked here hoping to hear some real experience, some nonsense comments too.
  
  Thank you so much for sharing your experience.
  - ihbh on 28/05/2025 - 10:50
    
    Here's a chart of what I'm describing: https://files.ozbargain.com.au/upload/22732/121822/tokyo_res…
    
    Note that real estate price charts are inflated (so it's worse that what you see) - when people renovate, build a new structure, they put money in and that inflates the chart, unlike shares, which are adjusted for the capital injection. That's why condos (red line) have risen more recently - more capital injection for new structures vs other RE types.
    
    Source: https://japanpropertycentral.com/2018/08/japan-property-pric…
    - rumblytangara on 28/05/2025 - 22:13
      
      +2
      
      Japan is a bit of a weird case though. Decades long systemic problems, and houses are torn down and rebuilt every decade or new owner.
      
      Japan is a great place for many reasons, but it isn't a great comparator to anywhere else in the world because it's so weird.
  - Grunntt on 29/05/2025 - 12:07
    
    +1
    
    We decided to commit to owning a home for the primary reason of forcing us to not waste our money on things that were worthless in the long run.
    If we hadn't been required to pay a defined amount every month to the bank I'm sure we would not have been disciplined enough to save/invest consistently.
    It really helped with learning how to budget and live within our means.
- JimB on 28/05/2025 - 16:30
  
  +4
  
  "The only reason people buy is in the hope of capital gains,"
  
  Incorrect.
  
  Many people buy because they want to live in a house they own and don't wish to be at the mercy of a landlord.
  - ihbh on 28/05/2025 - 17:21
    
    -1
    
    I meant if they were considering cost benefit (that is as an investment) if rental yield was piddly compared to interest rates and expected CG was <=0.
  - Jaspa7 on 30/05/2025 - 21:59
    
    two things can be true
    - JimB on 31/05/2025 - 00:19
      
      Of course and you’re very likely to make a profit, but I would say making a profit would be a secondary reason.
Gdsamp on 28/05/2025 - 10:29

+1

Locus of control
brendanm on 28/05/2025 - 10:31

+8

Most of this just sounds like gibberish.

You pay rent, in 30 years toi have nothing.

You buy in house, in 30 years you own it.

If you rent and want to move after 2 years, that money is gone.

If you buy and want to move after 2 years, you will get the money back.
- ihbh on 28/05/2025 - 10:42
  
  +8
  
  Incorrect comparison.
  
  You pay rent, in 30 years toi have nothing.
  
  You have a place to live.
  
  You buy in house, in 30 years you own it.
  
  You pay a lot more.
  
  If you buy and want to move after 2 years, you will get the money back.
  
  On average, no way. There are significant transaction costs of 5-10% - stamp duty ~5% sliding scale, agent commission, legals, etc., not to mention maintenance costs.
  
  The only advantage of buying is enforced saving. The renter can blow their money on treating themselves, etc. But if they invest in say shares and could gear as much as RE (not easy and many people don't have courage to take out margin loans; also price volatility means you can't afford to borrow as much), then they could end up ahead. That's assuming the RE market doesn't end up like Japan, China. When that happens, it will be clear cut.
  - pscac001 on 28/05/2025 - 13:56
    
    +3
    
    You have a place to live.
    
    You had a place to live for those 30 years, but you don't get to keep it in the future unless you keep paying.
    
    You pay a lot more.
    
    Probably true at various times, but right now my mortgage is $30 less than the cheapest rental in my suburb (which is significantly smaller than my house). Of course there are rates and repairs and such, but if rent increases even slightly over the next decade I think I'm going to come out ahead. Plus, at the end of it, I also have a house that I get to keep.
    
    But if they invest in say shares…
    
    Where are they living while they wait for these shares to appreciate? Are they paying back their margin loan AND paying rent?
    
    Obviously a house isn't the absolute best investment, but if you want an investment that also keeps the rain off your head then you will struggle to find a better option.
    - ihbh on 28/05/2025 - 15:41
      
      Where are they living while they wait for these shares to appreciate? Are they paying back their margin loan AND paying rent?
      
      The balance of mortgage and other costs over rent.
      
      Obviously a house isn't the absolute best investment, but if you want an investment that also keeps the rain off your head then you will struggle to find a better option.
      
      All investments, not just RE, depend on the current price (that is, how overpriced/underpriced it is) and future expected returns. For example, if something is way overpriced, no matter how great you think it is, it's not a good investment.
      - brendanm on 28/05/2025 - 17:44
        
        @ihbh:
        
        The balance of mortgage and other costs over rent.
        
        My mortgage is $550 a week or so. The house next door just got rented out at $950 a week.
        
        ihbh on 28/05/2025 - 17:46
        
        +2
        
        @brendanm: When I talk about stuff like this, I mean compare apples with apples. The appropriate comparison is interest rate on the full property value and rent on the full property value.
        
        It's meaningless otherwise. Say you've owned your property for 29 years and have 1% left to pay off; your mortgage might be $1 a week.
        
        brendanm on 28/05/2025 - 17:51
        
        +1
        
        @ihbh: You never owe the full value, you need a deposit. At the end of the day, with one payment, you end up owning something at the end, or getting all of your money back/making a profit depending on when you sell. With the other one you end up with nothing, and have to pay rent forever.
        
        xylarr on 29/05/2025 - 09:10
        
        @brendanm: You have to compare taking your 20% deposit and investing it. Also, you have to keep investing to make up to the equivalent costs of owning.
        
        mrvaluepack on 29/05/2025 - 06:43
        
        @brendanm: Easy to spit out this statement without providing any other further info if your LVR is currently 10% or something like that. Like others have said, buying vs renting is not always clear cut.
        
        brendanm on 29/05/2025 - 06:52
        
        @mrvaluepack: If nothing else, it highlights how once you buy, you are paying basically that amount until it is paid off. When renting, the price just keeps increasing, and you end up with the same thing at the end, nothing.
        
        mrvaluepack on 29/05/2025 - 10:51
        
        -2
        
        @brendanm: Not true. When comparing renting to owning a home, it's important to consider the full range of ownership costs, not just the mortgage. This includes council rates, maintenance, insurance, and long-term upkeep or renewals, which are often overlooked. Once these are factored in, the long-term cost difference between owning and renting tends to even out, with the balance shifting slightly depending on interest rates, location and local market conditions.
        
        I just looked at real estate and found similar for sale and rent homes, and did some calculations:
        
        buy price $990,000.00
        plus stamp duty $1,039,500.00
        Loan 50% $519,750.00
        interest $28,586.25
        rates $1,500.00
        maintenance $4,000.00
        insurance $1,250.00
        price appreciation $24,750.00
        
        equivalent rental per week $680.00
        
        annual rent $35360
        annual cost after buying (interest only loan) $35336.25
        (similar amounts)
        
        assume that buyer or renter has equal amount of cash upfront
        renter puts that 50% deposit into investment or high savings interest account $25,987.50
        annual appreciation from house at 2.5% $24,750.00
        (similar amounts)
        
        net total cost for:
        renter = 35360 - 25987.50 = $9372.5
        buyer = 35336.25 - 24,750.00 = $10586.25
        
        but what if buyer only has 20% deposit? annual costs would be around $45k instead compared to rental of $35k.
        
        brendanm on 29/05/2025 - 16:23
        
        @mrvaluepack: You have completely missed what I just said.
        
        To use my house as an example, when I purchased it my mortgage was $480 a week or so. Before buying I was paying $460 rent. My house would have rented out for $460 or so.
        
        Now, my mortgage is $530 or so a week, and my house would rent out for $900 or so.
        
        If I were still renting, if be having to spend hundreds of dollars more per week for the same thing. I also have an actual asset I can sell and recoup everything I've put in (plus some). The renter has absolutely nothing at the end of it.
        
        mrvaluepack on 29/05/2025 - 17:28
        
        @brendanm: You are also completely missing the point of missed opportunity cost. The example i provided shows that in some situations when renting you will actually be ahead and will be increasing your net worth faster than if you bought a home. Its just that your net worth is currently mostly tied to your home, while the renter might have the same or more net worth in other investments with more flexibility to perhaps buy a home of their own in the future.
        
        What was ur LVR when you bought it compared to $460 rental? How much have u spent on rates, insurance and maintenance over the years compared to the $460 renter?
        
        brendanm on 29/05/2025 - 17:48
        
        @mrvaluepack: You are still missing the point. The $460 renter doesn't exist any more. They are now a $900 renter, who has no money to put into investments as it's all going to rent payments and groceries.
        
        How much have u spent on rates, insurance and maintenanance
        
        Nothing compared to the increase in value while having a home.
        
        Also, your example a couple of comments up is ridiculous, no one is renting out a million dollar house for $680 a week.
        
        mrvaluepack on 29/05/2025 - 19:51
        
        @brendanm: You are also still missing the point. The $460 renter has accumulated more savings and investments than the home buyer because it made sense for renter at that time - see my previous calculation as an example. The renter was increasing their net worth by $3-4k more every year compared to the home buyer and has more money to spend on future rent or groceries, whereas the majority of the buyer's net worth is stuck in their PPOR.
        
        Nothing compared to the increase in value while having a home.
        
        Tell that to people whose home values have dropped or have sold an investment property as a loss.
        
        Also, your example a couple of comments up is ridiculous, no one is renting out a million dollar house for $680 a week.
        
        Heaps plenty in Melbourne, I bet you aren't really up to date with current property market.
        
        brendanm on 29/05/2025 - 21:25
        
        @mrvaluepack: You still seem to be missing the point. A few years of having $3k extra a year doesn't help much. You still have nowhere to live at the end, and your rental price keeps going up and up and up.
        
        Tell that to people whose home values have dropped or have sold an investment property as a loss.
        
        Yes, I'm sure those three people are devastated.
        
        Heaps plenty in Melbourne, I bet you aren't really up to date with current property market.
        
        Heaps plenty? Lol. I'm not in Melbourne, and couldn't care less about Melbourne.
        
        mrvaluepack on 29/05/2025 - 21:34
        
        @brendanm: A few years? Was it a few years when the rent went from $460 to $900? Please be realistic.
        
        For that amount of rent increment I would say a good 15 years minimum have to had pass.
        
        Can't convince a person who doesn't understand net worth and financial forecasts.
        
        brendanm on 30/05/2025 - 08:37
        
        @mrvaluepack:
        
        A few years? Was it a few years when the rent went from $460 to $900? Please be realistic.
        
        7 years. 7 X $3000 = $18,000.
        
        My house value went up $450,000.
        
        mrvaluepack on 30/05/2025 - 09:44
        
        @brendanm: Congrats, you have found the infinite money glitch. You should borrow more and invest in more properties. Next 10 years you will have a bazillion dollars worth of property with that growth.
        
        clipperroo on 30/05/2025 - 09:00
        
        @brendanm: @brendanm Maybe it made much more sense when you bought your house that time considering the difference between the weekly payments is only $20. With my scenario, I'm renting a $1.2M house for $600 pw. If you do the math, you probably need to pay double that to service the mortgage considering 20% deposit. Doesn't make sense
        
        brendanm on 30/05/2025 - 09:27
        
        @clipperroo: Not sure how you are renting a $1.2m house for 600. That's not normal.
        
        clipperroo on 30/05/2025 - 09:59
        
        @brendanm: I thought that's normal. Here's another example - https://www.property.com.au/vic/nunawading-3131/edith-ave/3-… or this suburb - https://www.property.com.au/vic/forest-hill-3131/.
        
        With that, I think it'll take more than a decade for rent to reach the repayments for someone who's buying now.
        
        brendanm on 30/05/2025 - 11:06
        
        @clipperroo: Lol, you are using something that needs a knock down rebuild as an example?
        
        clipperroo on 30/05/2025 - 12:09
        
        +1
        
        @brendanm: Did you look at the link on the suburb? Literally, the median house price is almost 1.2M and rent at 600 pw. Anyway, with the wide gap between monthly rental and mortgage repayments now, I don't think we're going to reach to a point again anytime in the next decade where what you're paying in rent will cost close to repayments.
        
        I think it all comes down to discipline. I disagree in the statement that you pay rent for 30 years and you have nothing. If a renter is disciplined enough to invest the difference between rent and mortgage, renters could have the same or more equity than homeowners.
        
        brendanm on 30/05/2025 - 14:31
        
        @clipperroo: If you think most people are disciplined, you are sadly mistaken. They'd rather than a new iPhone and base model Audi on a lease than save/invest.
        
        I also don't care enough about Melbourne to look at whether other suburbs follow your rent to value ratio.
        
        mrvaluepack on 30/05/2025 - 12:04
        
        +1
        
        @clipperroo: Brendan lives in QLD where they just experienced the property boom that VIC experienced 10-15 years ago. He thinks property prices will grow at a constant 10%+ PA forever.
        
        clipperroo on 30/05/2025 - 12:17
        
        @mrvaluepack: Lol yeah that's unsustainable. If a median house price now costs 1M and it doubles every 10 years, which means median house price will cost $8M in 30 years. Good luck to Gen Alpha
        
        brendanm on 30/05/2025 - 14:29
        
        @mrvaluepack: No, I definitely don't think that. I simply think I'd rather pay a similar weekly amount, and actually own the thing I'm living in. When I retire, I'll owe nothing, and have basically nothing to pay for. The renter will be paying whatever the current extortionate rental rate is at the time and have the uncertainty of having to leave and find somewhere else to live at any time.
        
        mrvaluepack on 30/05/2025 - 14:35
        
        @brendanm: You think it's a similar weekly amount but it's not anymore. Unless a home buyer today can cough up at least a 50% deposit, their mortgage repayments are going to be 1.5x the rent of a similar rental home. And the renter is going to be saving much more than $3k per year, more like $15 to 20k per year if the LVR was 80% in my example above.
        
        brendanm on 30/05/2025 - 14:36
        
        @mrvaluepack: In a single Melbourne suburb, yes.
        
        mrvaluepack on 30/05/2025 - 14:36
        
        @brendanm: Nope, many suburbs in Melbourne.
        
        brendanm on 30/05/2025 - 14:37
        
        @mrvaluepack: Again, I don't care about Melbourne .
        
        Also, the difference is going to be massive once the house is paid off but the renter is still renting.
        
        mrvaluepack on 30/05/2025 - 14:43
        
        @brendanm: And we don't care about Queensland as well.
        
        So if people's mortgages in QLD with LVR 80% home loan are similar to rental property of the same quality, then good on them, although I highly doubt so.
        
        I'd rather pocket extra money for future flexibility then pray and hope that house prices will continue growing double digits and be stuck with all my net worth tied down to one asset.
        
        brendanm on 30/05/2025 - 14:47
        
        -1
        
        @mrvaluepack: Having a quick glance at "him much rent can I charge" calculators, NSW and Vic are the only places that are wildly lower on rent than value. All other states and territories are roughly the same.
        
        It's been this way for as long as I can remember, approximate value, drop the zeros off the end, you get approx rent per week. When my rent was in the $400s, house values were in the $4-500k range. 20 odd years ago, rents were in the $300-400 range, values were in the $350-400 range.
        
        mrvaluepack on 30/05/2025 - 14:54
        
        @brendanm:
        
        Having a quick glance at "him much rent can I charge" calculators, NSW and Vic are the only places that are wildly lower on rent than value. All other states and territories are roughly the same.
        
        Source? Proof? Not true. I had a quick look at Carindale and I am getting similar figures. Low rent compared to home for sale prices, rental yield only around 3% which is worse than Melbourne. Which means - high mortgage payment, low rental.
        
        brendanm on 30/05/2025 - 15:08
        
        @mrvaluepack: https://connectskillsinstitute.edu.au/how-much-rent-to-charg…
        
        First thing that popped up, how accurate it is, I don't know, but seems it for Qld.
        
        I had a quick look at Carindale and I am getting similar figures
        
        I just had a quick look, the figures are no where near what you are quoting for Melbourne.
        
        Ignoring all this, as I've said, and keep saying, once the house is paid off, the renter is still renting. In addition, they have no control over how much of their weekly expenditure is going to allocated to housing.
        
        mrvaluepack on 30/05/2025 - 15:17
        
        @brendanm: https://www.realestate.com.au/property-house-qld-carindale-1…
        
        https://www.realestate.com.au/property-house-qld-carindale-4…
        
        See above examples, one for renting, other for sale. Similar quality properties. Less than 3% yield.
        
        Ignoring all this, as I've said, and keep saying, once the house is paid off, the renter is still renting. In addition, they have no control over how much of their weekly expenditure is going to allocated to housing.
        
        They do, assuming they have the same net worth as the buyer. They can just buy now, or continue renting. No headaches of trying to sell property if they want to move either. They have more flexibility and liquidity.
        And the buyer has to worry about home maintenance, water leaks, insurance, renewing fixtures, etc.
        
        Antikythera on 27/06/2025 - 19:13
        
        @brendanm:
        
        Not sure how you are renting a $1.2m house for 600. That's not normal.
        
        weatherboard 50s house on $1m worth of land.
        currently paying $370pw
  - brendanm on 28/05/2025 - 13:59
    
    You have a place to live.
    
    Not at the end of the time. If you bought a house, you'd still have a place to live, and not have to pay whatever they want for rent in 30 years time while you're retired.
    
    You pay a lot more.
    
    My mortgage is far less than if I were to try and rent, and I get something at the end of it.
    
    On average, no way. There are significant transaction costs of 5-10% - stamp duty ~5% sliding scale, agent commission, legals, etc., not to mention maintenance costs.
    
    What are people doing that they have million dollar maintenance costs? I think I've replaced a toilet valve and a sink mixer over 8 years.
    
    But if they invest in say shares and could gear as much as RE
    
    These days there's not much money left over after paying the rent.
    
    That's assuming the RE market doesn't end up like Japan, China. When that happens, it will be clear cut.
    
    Good luck with that.
    - ricadam on 28/05/2025 - 15:09
      
      Japan is a weird example as well. They see the house as a depreciating asset and land doesn't increase in value as much as Australia.

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