How much do you pay for rent?

phiber said:
A good read about interest rates... For all the renters that want to buy, all home owners that have bonds...


http://www.fin24.com/Debt/News/Interest-rate-Debt-warning-for-consumers-20140522
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Nice article. When we bought we worked on an interest rate climbing to 15% within 3 years time taking into consideration our increases at 7% and available cash from paying off debt.

This way we could see what we really could afford if things go South. Made the difference between buying what the bank said we could afford today (was 5% then) vs an interest rate of 15%.
 
Paul_S said:
It's not so simple for a couple of reasons.
1. The difference between owning and renting isn't very big in a lot of cases and rent quickly overtakes bond repayments.
Here is a quick example where owning initially costs 51% more than renting a R800 000 apartment:

Year 1
Rent = R5000 + R800 for elec = R5800 per month
Bond = R7000 + R1800 (rates, taxes, water & elec) = R8800 per month

<snip>
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I'm lazy, so I'm not going to redo your calcs, but you forgot a few costs of ownership, like insurance, maintenance and bond costs. You're also making assumptions about bond rates and investment returns. I'm not arguing that either option is better, but the numbers are a lot closer than most "buy, buy, buy" people think, once you've taken all the costs into account.
 
Paul_S said:
It's not so simple for a couple of reasons.
1. The difference between owning and renting isn't very big in a lot of cases and rent quickly overtakes bond repayments.
Here is a quick example where owning initially costs 51% more than renting a R800 000 apartment:

Year 1
Rent = R5000 + R800 for elec = R5800 per month
Bond = R7000 + R1800 (rates, taxes, water & elec) = R8800 per month

Year 2
Rent = R5800 + 8% increases = R6264 per month
Bond = R7000 + (R1800 + 8%) = R8944 per month

Year 3
Rent = R6264 + 8% increases = R6765 per month
Bond = R7000 + (R1944 + 8%) = R9099 per month
Click to expand...

That is a rather simplistic view.

http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=0

There is a slightly better model.

You are forgetting some things like insurance for brick and mortar, maintenance costs etc.

Most of the time buying should outperform renting, however it depends heavily on your lifestyle and future plans.

EDIT: Another quick calculator for a simplistic view. http://www.nytimes.com/interactive/business/buy-rent-calculator.html
 
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jsheed_sa said:
You're not taking in to account household maintenance costs...
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Yeah I know but maintenance isn't that much.
I average around R500 per month (R30K / 5 years) so the break even point would only shift out by a year or two at most.
 
I'm charging my tenant 11k per month,

* 660m2 plot
* 3 bedroom house with study
* double garage with granny flat
* Cape Town, southern suburbs

If we sign a long term contract I will install a pool this summer and recover the cost through the rental increase.
 
Not renting but I've seen ads on Private Property for apartments in my complex so as best as I can do for this thread :)

They were asking R10 000 including water, 90sqm in Bryanston.
 
Wow. I kinda felt lucky having 80m2 to myself for R4k in Boksburg. But then I remembered that I was in Boksburg.
 
Paul_S said:
It's a scam though.
Why should poor people with smaller bonds be charged higher interest rates than rich people with larger bonds?
I understand the banks are just trying to make money but yet again it's the poor who suffer more.
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Go have a look at South africa 2011 census data on what peope earn. It will change how you see the world. More than 40 % of adults in my area did not complete primary school. More than 40% of adults in my area dont have jobs. I now realize how privileged i am (once again).
 
In about a month from now I will pay R3900 per month for a 2-bedroom town house with an indoor braai and a small garden (actually just a patch of grass).

But this is an interim move for I'm looking to buy something similar.

In the city 2-bedroom townhouses go for R900K upwards but in small towns you could get it for R700K.

That's what I'm looking at.
 
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biometrics said:
I buy so that I don't have a landlord.
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I will do so ... soon. For the same reason, although I've had the most accommodating couple of landlords/ladies possible these last couple of years ...

But they should be, for my rent is always paid on time., and I don't abuse the facilities I have.
 
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biometrics said:
Also you can modify the place.

And every place I bought and sold has increased in value. Rent is lost forever.
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Just take care with that thinking...its what caused the 2008 crash (among other things). Decent bet anyway though...
 
I bought in 2010 and it looks like I will finish paying off the property in 3-4 more years. Yes that cost a bit but my montly payments are already well bellow what renting a similar unit would cost and once the unit is paid off I am down to paying levies, tax, and utilities which is a small fraction of what a renter will pay. The thing to remember is that I will carry the benefit of owning for the rest of my life! Hence for the next 30-40 years I will be ahead of the guy who chooses to rent indefinitely. Work out that sum if you will but if you are planning in staying somewhere for a while I see absolutely no sense in renting.
 
I honestly just do not want to do the downgrade that buying would force on us just yet. We have a large house with a big garden that is secure and comfortable. It costs me under R4k including water, lights and garden services. What the hell could I possibly buy for that?
 
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