Renting is dead money

Chazz Michael Michaels

Remember that old chestnut from the noughties?

Well, I'm starting to hear it creep back into common use in pub conversations and what-not. Have people learned nothing? To my mind, renting is paying for a service, which is shelter. It is no more dead money than paying for electricity is. In both cases, you hand over money for something you use, but receive no tangible asset. But its not a waste of money, because you benefit from a service.

If legislation was changed to increase the rights of tenants in long term leases, like in central Europe, I would never buy property, and invest my money in something less illiquid.

Next we'll be hearing this "ladder" sh1te again...

ninebeanrows

Well rent is so high at the moment, that sometimes it works out as better value to purchase a house.

wazky

Sure I bought two apartment blocks in Bulgaria there last week.

Sir Arthur Daley

Its all about Location, Location, Location.

Chazz Michael Michaels

Weathercheck wrote: »

Well rent is temporarily high at the moment, that sometimes it works out as better value to lock yourself into a 25 year contract

Fixed.

Fudge You

Weathercheck wrote: »

Well rent is so high at the moment, that sometimes it works out as better value to purchase a house.

O my golly gosh, you're right. Im buying a house on Monday morning.
Thanks for the insight.

Saggyjocks

That old chestnut used to be my favourite

So here I am years later in a house that I 'own' with an unsustainable mortgage that I 'own'

If such long term lease agreements had existed then I would feel more secure and at the very least would have known when the lease would end whereas every year in my home now feels like borrowed time

dotsman

Yes, you are paying for a service. But electricity is not a good example. A far more apt example is renting a car. If you only need the car for the short term (a few weeks/months, then renting is better that buying. The same applies to accommodation, if you only need it for a few months/years, then you are better off renting. However, if you are intending to live somewhere medium/long term (or forever!), then you are far better off buying. It's not just rights/protections, but also financial and psychological.

Right now, in many desirable places, the rent is higher than the mortgage repayments if you were to buy. Given that rent (over the long term) only increases, while a loan repayment typically bounces a specific range, not only does the rent exceed the loan repayment today, but will greatly exceed it in 10 years time, and dwarf it in 20-30 years time.

• If you are looking for short term accommodation then rent.
• If you are looking to settle down (for the medium term-forever), then buy.
• If you are looking to buy an investment property that provides excellent financial rewards in the medium to long term, then buy.
• If you are looking to buy an investment property and flip it in a few years for large rewards, you should stick to the bookies.

4th horsemen

Would you not jump up on the property ladder!!!!:D

Have to say tho, myself and herself bought last year, best thing we done. We had been renting previously together for 8 years and altho it is a service and has to be done I'd rather be paying my own mortgage than someone else's, especially now that it's good time to buy.

For 4 years we rented a sh'tty estate house with no insulation or anything, We love dogs so got a dog then another but always worrying bout garden getting ruined or anything else as it was not our house (we were allowed our dogs by owner)
It cost us €800 a month to rent and the way we see it, were always going to be living somewhere and needing to pay rent (which would always be around that price as my days of living with strangers are long gone). So why not Pay our own mortgage instead of someone else's!!!
We now have a nice house with stables and an acre of land and paying €160 less per month than renting and it's our own place to do what we want with, without any worries or having to answer to anyone.

We bought at a good time and of course everyone is different but in our case buying is best thing we've done.
When you are renting, you more or less are paying a mortgage, just not your own!

Red Crow

Technically it is 'dead money'. But I can see the arguments to both sides. On one hand you gain ownership of an asset but you also gain long term debt and on the other you just get use of an asset but no debt hanging over you.

Everybody to their own. The people telling us about how great renting is are as bad as those telling you to get on the property market.

dinnyirwin

dotsman wrote: »

Yes, you are paying for a service. But electricity is not a good example. A far more apt example is renting a car. If you only need the car for the short term (a few weeks/months, then renting is better that buying. The same applies to accommodation, if you only need it for a few months/years, then you are better off renting. However, if you are intending to live somewhere medium/long term (or forever!) then, you are far better off buying. It's not just rights/protections, but also financial and psychological.

Right now, in many desirable places, the rent is higher than the mortgage repayments if you were to buy. Given that rent (over the long term) only increases, while a loan repayment typically bounces a specific range, not only does the rent exceed the loan repayment today, but will greatly exceed it in 10 years time, and dwarf it in 20-30 years time.

• If you are looking for short term accommodation then rent.
• If you are looking to settle down (for the medium term-forever), then buy.
• If you are looking to buy an investment property that provides excellent financial rewards in the medium to long term, then buy.
• If you are looking to buy an investment property and flip it in a few years for large properties, you should stick to the bookies.

I think this is a great post. The older you get the more you want a place of your own. Same goes for when you get to the stage of having a family. But if you are young and dont need to "make a nest" renting is best.

snubbleste

Sure get a mortgage anyway and if you can't afford to pay at some point, you'll get to stay in your "family home" as long as you pay a token amount. The Government will make sure you are not turfed out on the street by protecting you, but if you are renting and can't afford it, well tough!

Ihatecuddles

I dont know why, but Id feel uneasy about renting long term. I wouldnt feel stable or something. We've just bought a house so it doesnt matter now, its done!

Fudge You

dotsman wrote: »

• If you are looking to settle down (for the medium term-forever), then buy.
  

You do realise that many many people cant BUY. Not many can afford to buy a house, I dont 100k+ under my pillow.
And if I (like many) go into a bank and ask for a mortgage, I would be laughed at.

So therefore I rent because I dont really want to live on the streets. In a super fantasy happy world, I would buy a house, maybe more than one.

dinnyirwin

Fudge You wrote: »

You do realise that many many people cant BUY. Not many can afford to buy a house, I dont 100k+ under my pillow.
And if I (like many) go into a bank and ask for a mortgage, I would be laughed at.

So therefore I rent because I dont really want to live on the streets. In a super fantasy happy world, I would buy a house, maybe more than one.

I think everyone takes that as a given.
We all know not everyone can buy a house. It was never the case and never will be.
Also some people cannot buy until they reach a certain stage in life either.

Fudge You

Red Crow wrote: »

Technically it is 'dead money'.





. The people telling us about how great renting is are as bad as those telling you to get on the property market.

On you're first point, its not dead money to me. Because I have to live somewhere.

I disagree with you on your last point. The ones who say "Rent is dead money", are usually being smug, and look down on people who dont own property. And basically calling them stupid!

brevity

"Sure now is the time to buy."

Fudge You

dinnyirwin wrote: »

I think everyone takes that as a given.
We all know not everyone can buy a house. It was never the case and never will be.
Also some people cannot buy until they reach a certain stage in life either.

You're right, people should take it as a given, but I still hear people saying, "why dont you buy?"

Menas

This thread feels like an old chestnut. We have a rent vs buy debate twice a month at the moment.

dinnyirwin

Fudge You wrote: »

On you're first point, its not dead money to me. Because I have to live somewhere.

I disagree with you on your last point. The ones who say "Rent is dead money", are usually being smug, and look down on people who dont own property. And basically calling them stupid!

I find that phrase is used more nowadays by people being sarcastic.
Like if someone points out that property prices are rising, they will reply sarcastically with "Here we go again, Rent is dead money, ha ha". Usually in the same sentence as "Sure what could go wrong"

dotsman

Fudge You wrote: »

You do realise that many many people cant BUY. Not many can afford to buy a house, I dont 100k+ under my pillow.
And if I (like many) go into a bank and ask for a mortgage, I would be laughed at.

So therefore I rent because I dont really want to live on the streets. In a super fantasy happy world, I would buy a house, maybe more than one.

I absolutely do realise that. But this thread is about whether it's better (more desirable) to buy/rent. I'm just saying (as you are) that it is more desirable to buy if you are planning to live there medium/long term.

dinnyirwin

Fudge You wrote: »

You're right, people should take it as a given, but I still hear people saying, "why dont you buy?"

Ask them Why dont they buy a castle instead of a little house

kippy

Chazz Michael Michaels wrote: »

Remember that old chestnut from the noughties?

Well, I'm starting to hear it creep back into common use in pub conversations and what-not. Have people learned nothing? To my mind, renting is paying for a service, which is shelter. It is no more dead money than paying for electricity is. In both cases, you hand over money for something you use, but receive no tangible asset. But its not a waste of money, because you benefit from a service.

If legislation was changed to increase the rights of tenants in long term leases, like in central Europe, I would never buy property, and invest my money in something less illiquid.

Next we'll be hearing this "ladder" sh1te again...

If at the end of paying for all your electricity that you use in a lifetime youd end up owning a portion of a power station that you could a. sell or b. Use as income for the remainder of your days or c. Pass onto your kids so that they could either sell or use the electricty generated from it for a relatively cheap price then the conparison would be fair......but of course none of the above is true.


Renting is not dead money either. Renting gives you a lot of freedoms that owning doesnt and it suits certain people at certain times in their lives.
I rented long enough however and as you get older your tolerance for sharing dwindles and your interest in stability increases.
Id also add that not everyone who owns a house got screwed......
We bought at the height of it with the intention of living in the house long term. Currently paying a lot less for mortgage than rent in same area. That suited us at the time. Renting no longer did.

mikeym

Back in the good old days people thought paying a whopper of a mortgage was great compared to paying rent.

"But the house value price will keep going up they said."

It is dead money though if you can buy the equivalent property for similar monthly outgoing and you either (a) plan on living in the property long term or (b) don't mind renting it out or selling it when you want to move then buying makes massive sense. Even if you are paying more in a mortgage than the rent a few years down the road you will be laughing with an extra wad of money in your pocket every month when it's paid off compared to a renter.

This is especially true at today's prices, if you have a decent deposit (which believe it or not a lot of people have) then you could be mortgage free in a short enough number of years. I can't understand people happy to rent long term, the place will never be your home and that would mean id never be happy in it.

MonstaMash

dinnyirwin wrote: »

Ask them Why dont they buy a castle instead of a little house

http://www.formerglory.ie/property-heathfield.html

Santa Cruz

wazky wrote: »

Sure I bought two apartment blocks in Bulgaria there last week.

Azerbaijan is the place to pump the money into. I hear those in the know are buying up all round them there. Sure what could go wrong

dinnyirwin

kippy wrote: »

If at the end of paying for all your electricity that you use in a lifetime youd end up owning a portion of a power station that you could a. sell or b. Use as income for the remainder of your days or c. Pass onto your kids so that they could either sell or use the electricty generated from it for a relatively cheap price then the conparison would be fair......but of course none of the above is true.


Renting is not dead money either. Renting gives you a lot of freedoms that owning doesnt and it suits certain people at certain times in their lives.
I rented long enough however and as you get older your tolerance for sharing dwindles and your interest in stability increases.
Id also add that not everyone who owns a house got screwed......
We bought at the height of it with the intention of living in the house long term. Currently paying a lot less for mortgage than rent in same area. That suited us at the time. Renting no longer did.

Isnt it amazing that people dont believe you when you say this - until they have reached that point themselves.

kippy

dinnyirwin wrote: »

Isnt it amazing that people dont believe you when you say this - until they have reached that point themselves.

It is but its understsandable.

Femme_Fatale

Chazz Michael Michaels wrote: »

Fixed.

Not an issue if they can afford it though? I can afford my mortgage quite comfortably.
But I agree renting is not dead money. Silly phrase. However there's utterly nothing wrong with arriving at the stage of wanting to buy a home when you have the means to do so.
Yeh I know the bank owns it and whatnot, but you still have much more ownership than you would when renting.

Fudge You

dotsman wrote: »

I absolutely do realise that. But this thread is about whether it's better (more desirable) to buy/rent. I'm just saying (as you are) that it is more desirable to buy if you are planning to live there medium/long term.

True true.
But when I hear this debate. I always just think to myself, its not a 50/50 choice. And I feel, some people dont realise buying is not that easy.
Maybe it was easy to get a mortgage about 6+ years ago. But now, talk to a mortgage broker/bank. Its tough I tells ya!!!!

dinnyirwin

MonstaMash wrote: »

http://www.formerglory.ie/property-heathfield.html

How much do you want for it?

stimpson

House prices have started to rise again in Dublin. The optimum time to buy was about a year ago. The same smug pundits will still be pissing their rent up the wall while the market goes up.

At the end of the day my mortgage is €300 less per moth than renting in the area. Even if I am in a bit of negative equity I can still makeup repayments and will have something to show for it in 20 years. I can't fathom how I would ever be better off renting.

dissed doc

Chazz Michael Michaels wrote: »

Remember that old chestnut from the noughties?

Well, I'm starting to hear it creep back into common use in pub conversations and what-not. Have people learned nothing? To my mind, renting is paying for a service, which is shelter. It is no more dead money than paying for electricity is. In both cases, you hand over money for something you use, but receive no tangible asset. But its not a waste of money, because you benefit from a service.

If legislation was changed to increase the rights of tenants in long term leases, like in central Europe, I would never buy property, and invest my money in something less illiquid.

Next we'll be hearing this "ladder" sh1te again...

The legislation in Ireland is stacked against landlords and the PTRB is heavily biased against landlords. It is a requirement for a landlord to be a surrogate mammy and even supply a microwave. That is what people want. Then trash the place, pay no rent for a year, and get off scott free.

mfergus

What about if you're renting a place with decking??

barone

the whole point of buying versus renting to me is that eventually you will have a home that costs you no more rent ever, so long as ya dont go beyond your means,or likely means then i think renting long term is silly.

when you retire you should have paid off your house,you can stay rent free.. sell and move away etc etc..

Fudge You

stimpson wrote: »

House prices have started to rise again in Dublin. The optimum time to buy was about a year ago. The same smug pundits will still be pissing their rent up the wall while the market goes up.

At the end of the day my mortgage is €300 less per moth than renting in the area. Even if I am in a bit of negative equity I can still makeup repayments and will have something to show for it in 20 years. I can't fathom how I would ever be better off renting.

What are you going mad for?
Who are these same smug pundits???
You kinda sound smug, by your comments "pissing their rent up the wall". "Ill have something to show for it in 20 years"

Kinda a pot/ kettle arent ya?

MonstaMash

dinnyirwin wrote: »

How much do you want for it?

To PM's

donegal__road

say for example you borrowed €250,000 in 2006 to buy an apartment.

Total repayments on €250,000 @ 4% for 30 years = €433,725


What will your apartment be worth in 30 years is the question.

bnt

dinnyirwin wrote: »

I think everyone takes that as a given.
We all know not everyone can buy a house. It was never the case and never will be.
Also some people cannot buy until they reach a certain stage in life either.

Maybe, but there was a time when a family with a single modest income could afford a house. There are surveys of housing affordability, and according to the latest (pg 27) property in Ireland is becoming affordable again ... as long as you aren't trying to buy in or around Dublin.

Ireland's challenges could be great. The national statistics bureau, the Central Office of Statistics (CSO) recently projected that the Dublin metropolitan area will experience population growth of 22 percent between 2011 and 2031. The high projected population growth could lead to house price increases that could equal those of the last decade.

I think the "renting is dead money" folks are making some unwarranted assumptions about the future. For example, interest rates are low, but are they going to stay low for the next 25 years? Remember that you can easily pay twice the mortgage amount, over time, due to compound interest.

Then there's the assumption that you will be able to sell the house at a good price at a time of your choosing. Firstly, you may not be able to choose when, due to circumstances beyond your control. You can't control demographic shifts - your desirable area might not always be desirable. Having seen the inside of a few houses in the Dublin area, I have to wonder what kind of expensive repair work these houses will need, over 25 years later, assuming they are still in one piece by then.

shruikan2553

A problem with renting is estate agents. They only want 1 year contracts so they can up the rent and at the end you are left dreading what problems or damage is your fault so they're taking as much money as possible.

stimpson

Fudge You wrote: »

What are you going mad for?
Who are these same smug pundits???
You kinda sound smug, by your comments "pissing their rent up the wall". "Ill have something to show for it in 20 years"

Kinda a pot/ kettle arent ya?

Calmer than you are.

alias06

If you don't buy now you'll never get on the ladder

Gran Hermano

Dead money?
Renting, not always.
Undertakers, always.

donegal__road

Having seen the inside of a few houses in the Dublin area, I have to wonder what kind of expensive repair work these houses will need, over 25 years later, assuming they are still in one piece by then.

I think people should speak to some of the workers who were involved in the construction of property during the boom, before they decide to buy a house.

Many of the houses were thrown up in a few weeks with massive short-cuts taken.

krudler

Femme_Fatale wrote: »

Not an issue if they can afford it though? I can afford my mortgage quite comfortably.
But I agree renting is not dead money. Silly phrase. However there's utterly nothing wrong with arriving at the stage of wanting to buy a home when you have the means to do so.
Yeh I know the bank owns it and whatnot, but you still have much more ownership than you would when renting.

This basically, if/when I can afford to take on a mortgage and find someplace where I want to live well, forever basically then I'd buy a house, right now I want to travel and don't want to commit myself to something like that so am happy renting.

donegal__road

alias06 wrote: »

If you don't buy now you'll never get on the ladder

dont make this mistake please.

alias06

donegal__road wrote: »

say for example you borrowed €250,000 in 2006 to buy an apartment.

Total repayments on €250,000 @ 4% for 30 years = €433,725


What will your apartment be worth in 30 years is the question.

If you have the money to do this and it makes sense then go for it. But there is absolutely no point worrying about 30 years time. With the way the world is going with climate change, economic instability and over population we just have no idea what property will be worth in 30 years time at which point you'll probably have more serious things to worry about like your physical health. You can't take it with you anyway.

alias06

donegal__road wrote: »

dont make this mistake please.

I was joking.

scrubber72

We (my wife and I) are renting for the last 7 years. When we decided to get engaged we also applied for a mortgage of 240k. We were approved but couldnt find a house worth that value wise. Lots of crap out there.
Forward two years and wife loses job. No pay off just bye bye see ye later. Find plenty of ok houses that fit our criteria but not the one.
Forward another year wife starts working again and we talk to bank about our options. They say she has to be in full time employment for 18 months, we wait until then and are told that we can get 100k. Found it very difficult to get a place for that money.
Then 2 years ago she is made unemployed again so we are completely back to square one.
We called around to the banks and we are either told that they wont give us anything or in the case of one bank they offered us 20k. I told them i was looking for mortgage not a car loan.
I am on 42k per annum and we have roughly 40k in savings.
Its all down to our NDI which I believe are completely untrue figures that the banks use.
We pay 700 euro on rent, have no debts or loans and now a daughter.
For years we tried to find a home but its not for us as the banks say.
All my friends had said get on the ladder quick but now more and more of them say we are better off in the situation we are in now, with our savings that they don`t have.
Maybe some day we may get somewhere but until then we have to rent so to me "no its not dead money".

sonandheir

snubbleste wrote: »

Sure get a mortgage anyway and if you can't afford to pay at some point, you'll get to stay in your "family home" as long as you pay a token amount. The Government will make sure you are not turfed out on the street by protecting you, but if you are renting and can't afford it, well tough!

I recently bought a house and the above rationale played a big part in my decision. Me and my family would be simply turfed out of our house if I lost my job and was renting, but we are far more secure not paying our mortgage. The banks/government are never going to evict a family with 1 family home(no investment properties). Can you imagine the primetime special.