Rent or buy?

Lager said:
yeah that's true but at the end of the bond term whether it be 20/30 yrs (or if you can pay it off sooner) you still have an asset (one that has grown considerably in value), whereas with renting...well i think you get the picture
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I have an investment portfolio that grew for 20/30 years and no debt.
 
What's key is the difference between rental cost & purchase bond + levies & insurance. I find that basically I pay mortgage costs when renting in Jhb/Pta so I basically just need to account for the extra. Buying your residence is always good but remember to budget for 133% payments to drop the twenty yr bond to about 13 yrs.
 
Hamster said:
I have an investment portfolio that grew for 20/30 years and no debt.
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You could also have had an investment portfolio that grew 20 years AND a property that was bought for R500 000 and cost R1 000 000 after being paid off (and can be sold for R1,5million) and now since you don't have to pay bond, you can invest that bond cost money into the investment...

If you rent you will still need to keep paying rent.

Also involves buying the right property for the lowest price possible.
 
Lager said:
what does that have to do with this thread?
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This would be the renting part, numb nutts.

supersunbird said:
You could also have had an investment portfolio that grew 20 years AND a property that was bought for R500 000 and cost R1 000 000 after being paid off (and can be sold for R1,5million) and now since you don't have to pay bond, you can invest that bond cost money into the investment...

If you rent you will still need to keep paying rent.

Also involves buying the right property for the lowest price possible.
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This is true, but the opposite could happen as well. I'm not saying property is a bad way to go (my parents made all their money through property) but it very much depends on the individual/llifestyle. There is no clear better option between buying and renting.
 
Chrome said:
At 50, life is mundane. No? :p
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Off topic...

Funny you should say that. There's a 51 year old at work who is supposed to be on leave but keeps coming in the office. He's got f#ckall to do at home so he pops in the office to work. Quiet depressing to observe !!!
 
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In a favourable economic climate buying is better. Interest rates are lower/stable and capital gains on your property beat inflation. However during the downturn you are better off renting as your lease increase is guaranteed to be an annual occurance. Interest rates on the other hand can increase repeatedly in a single year resulting in you having to sell at below market value because you no longer can afford.
 
supersunbird said:
You could also have had an investment portfolio that grew 20 years AND a property that was bought for R500 000 and cost R1 000 000 after being paid off (and can be sold for R1,5million) and now since you don't have to pay bond, you can invest that bond cost money into the investment...

If you rent you will still need to keep paying rent.

Also involves buying the right property for the lowest price possible.
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Precisely. I was hoping numb nuts could figure that out so I didn't want to spell it out for him.
 
Think of buying as a form of retirement savings as well. Ideally when I retire I want to have paid off a couple places and live off the rent etc
 
If you pay off a bond your payments remain the same (ignoring interest rate fluctuations).
If you rent your payments increase every year.

Can't see why one would choose to rent.
 
supersunbird said:
Flexibilty is one reason.
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You pay for that. You might as well buy and sell, the costs are high but you don't do this as often as when renting.

Investment growth:
I purchased my apartment for R1,4m 2 years back and I can sell it for more than R1,65m now, possibly R1,7m. Not bad I think. (Agents keep calling me every few months)
 
satanboy said:
You pay for that. You might as well buy and sell, the costs are high but you don't do this as often as when renting.

Investment growth:
I purchased my apartment for R1,4m 2 years back and I can sell it for more than R1,65m now, possibly R1,7m. Not bad I think. (Agents keep calling me every few months)
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im guessing that's like a 7/8% growth per year which is not bad at all
 
I understand what Hamster means Ito lifestyle requirements as a factor for deciding on renting or buying, but from a strictly financial point of view there is no argument that buying is the way. Well done satanboy, you've made a good investment there. You obviously did your homework well.
 
supersunbird said:
And my R490 000 rental property is probably near R1 000 000 now, bought 7 and a half years ago.
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Ok here's a question. Let's say you sell that property and for sake of example you get a million in your pocket now. Would you be able to buy a better/bigger property than that one with this million bucks?
 
Lager said:
Ok here's a question. Let's say you sell that property and for sake of example you get a million in your pocket now. Would you be able to buy a better/bigger property than that one with this million bucks?
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Probably not.

I've calculated I've put around R120 000 of my own money into the property over the 7 and half years (revamped kitchen and new tiles on the bottom floor, special levies and when it didn't pay for itself and whatever else), the rest was tenants money.

If I sell now I'd pocket about R600 000 (after the outstanding bond balance is settled), having out in about R120 000.
 
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