Own or rent??

[Lou Girardin]

You left off a few options there man.
Like buy, wait 5yrs for property to appreciate.
Borrow against this to purchase a property to rent out so as the rent covers out goings.
Wait 5yrs and do the same again.
Wait 5yrs and do the same again.

Money for nothing.

Then property values slump, rents fall from oversupply, vacancy rates rise. Your contribution to the mortgage becomes onerous.
And someone gets a real bargain from the forced sale.

[Joni]

THE BOTTOM FIVE OPTIONS SHOULD READ OUTSIDE AUCKLAND - Can a mod please change??

done

[Sniper]

I'll leave the country before buying in NZ.

[kiwifruit]

bought 2 years ago in Taupo
make more in capital gain, over 2 years, than i have in ten years of working

best thing i ever did.

[Big Dave]

even if you take an 'interest only' loan and bank on the capital appreciation you'll do a lot better than renting and paying off someone else's loan.

You're not 'stuck' if you own the place - just the opposite - if you want to you can fuck off with options - sell it rent it - or have something to come back too.

Go halves in a place with a family member or mate if you can't raise the mortgage on yer own.

And every day sooner you do it you'll be better off.

[Squeak the Rat]

I'm on a good salary, have 15% deposit saved and I am not going to buy in the near future. I've calculated that I will be better off paying rent and saving a larger deposit. I can't afford to buy where I want to live and still have a life.

Sure I'm paying the mortgage for some one else, but hello - most of your mortgage payments (especially in the first 5-10years) are interest which goes to lining the banks pockets, not yours.

I also have trouble believing that property prices are going to rise too much more in the next 3-5 years. What with the economic climate and the interest rates, I'm going to wait a couple of years and see if there are any good bargains. It was a good property boom cycle, but I beleive I missed it. Economic cycles are a reality.

BTW - Have you seen how many rental properties are available? Every man and his dog jumped on the rental property bandwagon. People are going to start having trouble attracting tenants and paying the mortgage on these properties.....

[Big Dave]

I'll leave the country before buying in NZ.

Always good to let priciples stand in the way of common sense.

[RantyDave]

We bought in Wellington, six/seven years ago. It seemed like a completely insane amount of money at the time (we moved up from the arse end of Picton) but really glad we did. I guess technically we've just about doubled our money, but since if we sold the house all we'd do is have to buy another then I guess we realistically made nothing.

Couldn't afford to buy where we are now. Not sure we could afford to buy at all, to be honest - certainly wouldn't be money for motorbikes knocking around. Between the oversupply of rental properties, the interest rate, and a housing market which ... if not going to pop ... will certainly produce lower than historical returns over the next few years then I'm not sure it's a good time to own at all.

God alone knows how people are supposed to own their first home now. Must be very depressing.

Dave

[The Stranger:Me]

Then property values slump, rents fall from oversupply, vacancy rates rise. Your contribution to the mortgage becomes onerous.
And someone gets a real bargain from the forced sale.

That is why I said 5yrs, not 2yrs as many do.

Usually your income rises to a peak around 45 and this will hopefully cover a potential bad period.

Rents usually increase and the property you have had for say 10 or 15 yrs will hopefully no longer need the large rent increase since this time and can be sustained on the lower rental value.

Sure what you say has happened in the past here and for instance on the Gold Coast. Banks were caught out badly at this stage too as they were killing the market with their mortgagee sales. They have wised up a lot and generally won't put themselves in this situation again. I.e. they wont loan to someone who is over exposed.

So between your common sense and the banks desire to not loose money I am sure the risk can be managed.

And what the hell - 9 times out of 10 the worst never happens and 9 times out of 10 when it does, it is not as bad as you thought anyway, so give it a go. Just don't over expose yourself.

[Sniper]

Always good to let priciples stand in the way of common sense.

Not that mate, but at my current salary and the way the market is going. I will never have enough to put a deposit on a house that is worthwhile and will apprieciate. If I was to get into it, it should be now, not in 5 or 10 years.

Its a bugger.

[Motu]

I have moved out of Auckland twice,a bloody good move both times - I hope I don't do it a 3rd time!

[The Stranger:Me]

Ahh, the good old slumlord!

The thing is you have to be able to crack the market in the first place to do this.

Ok, if you buy and wait for a capital appreciation (how ever long that may be) you can use the capital appreciation to "crack the market". Looking at Lou's example, it may not be a long wait, but hey even if it is 10 or 15yrs, you are young, you got time.

Oh and watch the "old" shit ok.

[ManDownUnder]

Then property values slump, rents fall from oversupply, vacancy rates rise. Your contribution to the mortgage becomes onerous.
And someone gets a real bargain from the forced sale.

Yup... and the ones with brains are saving their cash right now... NOT taking on the high interest rates... and wait.

When the first of the crashes starts to happen... and they're not far off... go offer them some money.

Always do what the market wants - which is the opposite of what the market does. At the moment... people are still buying - so we SHOULD be still selling... but when they want to sell... do them a favour... at a favourable price.

[Lou Girardin]

Anyone thinking of buying should wait at least 1 1/2 to 2 years for the property cycle to hit the trough. Cycles are generally 7 years peak to peak.
There will also be the opportunity to steal something from a burnt investor, it often takes 3 -4 years for the pain to get too great for them.

[ManDownUnder]

Anyone else out there ever thought of forming an investment company for this stuff?

Let's say we get10 people, each with 30k (borrowed or saved - doesn't matter too much).

All throw it in the pot and buy a place... at a favourable time per my previous post.

Watch it go up in value and then ... I defer to CaN's wisdom... use the equity, and buy another... and another... and ... you get the idea.

There would have to be some pretty clear ground rules re cashing up/out of such a company but I don;t see it would be too hard.