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Is it better to rent or buy property?

BMT team — Sun, 08 Mar 2020 23:17:04 +0000

Is it better to rent or buy property? It’s an age-old question that continues to spark debate. In previous years Australian property prices, particularly in Sydney and Melbourne, were among the most expensive in the world, forcing many buyers out of the market. However, a sluggish economy and subdued property market has once again opened doors for those looking to get on the property ladder. With the residential market recovering from recent lows and house values still well below peak, the question of whether to rent or buy is more relevant than ever. In this article we will look at: Renting advantages Renting disadvantages Buying advantages What is PropCalc? Renting advantages It’s more affordable One of the main benefits of renting property is the ability to live in an area that you may not be able to purchase in. A perfect example is Bondi where the average weekly rent for a unit is $675 but the average purchase price is $1,050,000, according to realestate.com.au. Renting offers affordable living without having to comprise on location or lifestyle. Less upfront costs Another key benefit is the fact that you don’t need a large deposit. In order to buy property, you typically need to have at least 10 per cent of the purchase price for a deposit. If you’re purchasing in Bondi, that’s $105,000. In most scenarios, if you want to avoid paying Lender’s Mortgage Insurance, you’ll need a 20 per cent deposit. Add in your conveyancing, pest and building inspection and solicitor fees and the numbers quickly add up. You also don’t need to stress about ongoing maintenance costs or problems as in many instances it’s the landlord’s responsibility. Renting disadvantages You’re paying someone’s mortgage Though there are drawbacks, with the most obvious being that you’re not paying off your own property. Unlike a mortgage, rental payments are never-ending and essentially go towards the landlord’s income. Lack of stability Along with this, the flexibility in renting can also be seen as a lack of stability. When your lease ends you have to either negotiate a renewal or move to a new property, both of which require time and effort. Rules and restrictions You also have to abide by the landlord’s rules, which means you may be restricted when it comes to making the space your own. Renovations and substantial redecorating are usually off the table and pets may be prohibited. Buying advantages Security and stability As previously mentioned, there is security in owning your own property. You won’t have to deal with finding a new property at the end of a lease and can work towards turning the house into a home. This stability is particularly appealing for those with young children. You’re in control You’ll have full control of the building, meaning you can design the space to cater for your needs without having to seek approval from a landlord. You can even turn the property into an investment down the track. Paying off your own mortgage Owning a property also means you won’t have to deal with annual rent increases. You can make repayments at a fixed rate which enables you to better plan your finances. It can also act as a form of enforced saving, encouraging you to spend less and pay off your loan sooner. It’s important to do your research before purchasing property, particularly when it comes to your holding costs. A simple way for buyers to do this is by using PropCalc. What is PropCalc? PropCalc is an essential cash flow calculator that could help thousands of Australians reduce their risk of mortgage stress. The tool is revolutionising property research by using key market analysis and customisable data to show exactly how a purchase will affect your finances. Can PropCalc help you decided whether to rent or buy property? Yes. PropClalc allows you to customise and personalise data to produce results tailored to your situation. More than just a mortgage calculator, PropCalc allows users to personalise data such as purchase costs, property income, annual expenses and cash flow. Available online or as an app, the free calculator also considers the stamp duty, variable deposits, interest rates and finance fees. To help first home buyers and those less familiar with the housing market, PropCalc prefills suburb price averages in line with the property you’re interested in. Keep this prefilled data or change it to suit your needs – it’s completely up to you. Once you’ve personalised the data, PropCalc will show you a full breakdown of the holding costs of any property you’re interested in. Compare the results to your current rental property to get a deeper understanding of what you can truly afford. Start using PropCalc today PropCalc is free of charge and available in MyBMT, a comprehensive portal designed to help investors access and manage their depreciation and property needs. The interactive platform gives you on-the-go access to depreciation information, insurance quotes, valuable market analysis and helpful property tools. To join more than 120,000 people enjoying the benefits of PropCalc, visit bmtqs.com.au/propcalc today.

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How to become a property investor while earning less than $80k per year

BMT team — Thu, 19 Sep 2019 06:10:25 +0000

You don’t have to be a high-income earner to purchase an investment property while living in Sydney or Melbourne. There’s a simple solution for those earning less than $80,000 per year who are struggling to get on the property ladder – rentvesting. How to become a property investor by rentvesting Rentvesting involves purchasing a property in an affordable suburb whilst continuing to rent in an area suited to your lifestyle. It’s a great way to get into the property market sooner, particularly if buying a home in the area you live is currently out of reach. By buying an investment property, rather than a home, you can build a property portfolio which can later be used as leverage to help afford a home, or even additional investment properties down the track. For many on a moderate income, buying a property in Sydney or Melbourne has been unachievable in recent years. According to the latest CoreLogic data, the median dwelling value in Sydney and Melbourne is $720,072 and $626,703 respectively. While these figures may be out of reach for those earning under $80,000, there is ample opportunity outside the metropolitan areas for savvy rentvestors. Regional vs Metro Current BMT Tax Depreciation data indicates the majority of Australians don’t look outside their local areas when it comes to buying an investment property, significantly limiting their investment opportunities. FY 2018/19 data shows that 92 per cent of those who live in metro properties only purchased an investment property locally, compared to just 8 per cent who invested regionally. Regional investors are far more likely to invest elsewhere, with 64 per cent owning a property locally and 36 owning an investment property in metro areas. While the stats show some investors are limiting where they buy, those who earn a moderate income should be encouraged by the fact that they fall within the majority when it comes to the average Australian property investor. The latest data from the Australian Taxation Office for the FY 2016/17 found 64 per cent of people who own an investment property have an income under $80,000. For those who do make their way onto the property ladder there are lucrative tax advantages. Owners of income producing properties are eligible to claim expenses relating to holding a property such as property management fees, council rates, insurance, repairs and maintenance and interest on their loan. They’re also eligible to claim depreciation deductions for the wear and tear that occurs to the building. By taking advantage of the depreciation deductions available, investors reduce their holding costs and can even achieve positive cash flow. BMT Tax Depreciation has worked with more than half a million property investors to help uncover tax deductions for the wear, tear and ageing of their investment properties. To learn more about the benefits of claiming depreciation, simply Request A Quote or call the expert team on 1300 728 726.

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Australia’s renting attitudes and behaviours

Bradley Beer — Thu, 09 May 2013 05:21:00 +0000

If you’re considering purchasing an rental property, one area of research to consider is to discover more about the tenants you may end up renting the property to. Recently, realestate.com.au conducted a national survey of renters and sharers which may help to provide insight into Australia’s renting attitudes and behaviours. The survey found the states with the most expensive rental markets remained New South Wales and Western Australia. Nationally 58 per cent of respondents expected rental prices to rise in the first half of 2013. Of the states, Western Australian respondents had the highest percentage of expectation of rental price rises, with 76 per cent of respondents expecting rental prices to rise. 25 percent of those who were attending rental inspections nationally reported more than 10 other people typically were attending the inspections. Of the states, Western Australian respondents again had the highest percentage, with 60 per cent reporting more than 10 people were typically attending rental inspections. Of those surveyed, 56 per cent were looking for a short term lease. In Western Australia, those looking for a short term lease accounted for 71 per cent of those surveyed from this state.For a full break down and more statistics state by state, view the full article regarding the survey by selecting the following link: https://discover.realestate.com.au/renting-sharing/news/our-national-renting-habits

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