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Rent or own - get insights and understand renters’ and home owners’ views, help to make your own informed decisions. Avoid pitfalls, take advantage of the due diligence and tenant screening process, be a smart home owner.

Rent or Own – What makes the difference?

Text Box: Renting or Home ownership

Klauster Properties Limited  (KPL)

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Why freezing money into a mortgage account?

 

Even if you hate money, still it is the lifeblood for your achievements and societies. Without financial stability and savings you get nowhere. You could save parts of your income for a “nest egg” or buy an asset with loaned money and pay interests and loan repayments instead of saving money and increase wealth by ownership.

 

Two different ways of wealth creation also perform differently because of involved risks – what has your preference? But ownership has one advantage more—it is called “borrowing power”. Possibly already experienced - you need urgent cash and that now, maybe to save a life, a business or just for an opportunity of your lifetime! Assets do back up your livelihood. Let us talk about a common model—home ownership.

 

 

Home ownership is with a higher price tag

 

Consider renting creates more cash-flow at the time. But by paying off a mortgage over time the weekly expenses for housing decrease in contrast to rent payments. Winning is an endurance game because ownership is an enforced saving plan. If a renter has a similar income in comparison with a homeowner, more cash on hand makes spending easier than saving. And true, ownership has higher costs for two reasons, a home is a liability and home proud people just spend more on housing as renters.

 

When talking about home ownership the starting point often is tax free capital gains. Well, liabilities are heavily taxed in NZ and fluctuations of the local job market impact peoples’ income and career. The flexibility or precisely the “mobility of renters” is an income increasing factor combined with lower housing cost that has outrun in my case the capital gain. Capital gains are not free if you upgrade a property over the years of ownership with new heating, insulation, ventilation, double glazing and new flooring, hot water, kitchens, bathrooms, unavoidable repairs  or replacements  for roof, gutter, cladding, drive ways, fencing, etc.

 

When renting, you can afford maybe a higher housing standard, you wouldn’t get the finance to own, drive an expensive car, but after years of excitement— how much wealth would such lifestyle cumulate?

 

 

Social considerations

 

Looking at the social side-effects, you’ll possibly prefer to live in residential areas with high level of homeowner occupancy, knowing that home ownership creates strong communities, defeating crime and anti-social behavior.

 

 

 

Renting and Ownership at some stage in life

 

Get an understanding what your life, family and career may look like in years ahead for making good and long-term decisions. Each life has its challenges and looking at different views helps making good decisions — there is no right and wrong. As Andre Maronian wrote

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