Do you believe rent is "dead money"?

Magenta

fasty wrote: »

Do you pay rent to your parents? Or a chunk of the bills?

Yes I do.

BraziliaNZ

Kipperhell wrote: »

I get people not wanting to buy and the fear. The question I think people should consider asking themselves is where and how you plan to live in your later years?

Rent doesn't get cheaper once you retire on a fixed/reduced income. The state will provide you with accommodation if you are poor but that means you will be living a pretty miserable standard of life.

I am not saying a house magically makes retirement plans better but it gives an awful lot of stability. People seem to confuse the current situation with long term life plans. It is not unlike somebody quitting school to be a brickie because there was loads of money in it and now being unemployed. It was probably a bad idea not to finish school in the long term view

Take the person who has been renting for 7 years was 25 when they first rented. So they are 32 now probably best to wait another 2 years making them 34 when they get a 25 year mortgage if they are lucky.59 when they pay off their mortgage but others will be 50 having 15 years to increase their pension fund versus 6. I guess you could be saving the whole time but we know most don't do this.

My solution to this is to retire abroad in the sunshine baby!!

Kipperhell

Electric Sheep wrote: »

I would consider myself to old to get a mortgage if the shortest mortgage I could afford would not be paid back before the age I choose to retire. It's irrelevant to me really as I bought my home back in the late 90s and will have it paid off within next few years.

Getting a >20 year mortgage means that you are paying in interest what you should be saving and putting toward your pension. Better to save and add to pension when younger and more interest can accrue than try to play catch up with your pension in the last few years before retirement.

I would consider a 25 year mortgage to be standard so that puts the age limit at around 40 and pushing it to 45 if you can afford a 20 year mortgage. Some people will be finished their mortgages by that point and not have paid money on rent. If you intend on buying rent can be seen as dead money. I saw quite a few people in their 30s very worried about missing the chance to buy. I have friends who stayed renting and the only things they own are a tv and laptop and maybe a car (most are actually on finance).

The recent market volatility in the market has pretty much wiped the value of most pensions. As Allen Carr said " Anybody out there retiring in the next few years, let me tell you that you aren't" That was one of the reasons why so many people went for property investment as it gives a more tangible investment they felt in control of. Even subsidising renting property can seem like a better pension plan.

My pension is worth less than I put in as is everybody I know.

mrgaa1 wrote: »

Surely the argument should be renting or owning your own property is a reflection of the current status of your life? By that I mean most people renting are single and most purchasers are married or in a long-term relationship or am I generalising too much here?

There is an element of this all right but apparently the biggest growth in mortgages was to single woman. Without being sexist woman are working to a biological clock which really can influence their decision making on when to settle down. Men do not get the same sense of urgency hence many decided to wait the market out. Renting is generally for younger people all right.

A thing to note is the fact people who rented all their lives in Ireland would generally have rented from the state and not privately. The state vastly reduced such holdings so it will be quite tough on people who never bought. I don't think many people will have the option to rent all their life in this country. Those who do will be very poor.

kippy

mukki wrote: »

one thing that i'm supprised no one has mentioned about renting is..... you know exactly how much you are going to pay for the next year


when you own a house ....
your mortgage repayments bob up and down
you have to repair/replace everything that break down
you have to re-paint rooms, clean gutters, put up shelves, tighten screws, unblock sinks, buy more furniture, put up pictures, fix leaking tap.

i have not had a day off since we moved in


if i was renting i would be on the playstation on my days off

Some people would say thats also part of growing up...... (JOKE)

To be honest, I've had this discussion before with various people and would agree with a lot of what some people have said. People make decisions on renting or buying based on their circumstances and what they believe is best for them. Sometimes however (on both sides of the fence) people believe what is best for them is also best for everyone else.
Personally, when we bought it was best for us, we wanted stability in an area (not be forced out of a house at landlords whims), the house was in a good location, good size, decent price and it was somewhere we really like. Most importantly it was affordable for us. Didnt really mind too much about possible price fluctuations as we weren't looking to sell at any stage in the future.
So, is rent dead money? Its a payment for a service which has its pros and cons attached and whether or not it is dead money is dependent on your attitude to it.

faceman

Um, lots of the points and comparisons being put forward isnt relevent.

The term dead money is the wrong phrase to use when discussing the payment of rent.

When you purchase your home, you are also purchasing a long term asset. Unfortunately the last 10-15 years presented Ireland with a unnatural scenario where you could buy property and sell it at a tidy profit 6 months later. The government, bankers and developers all did what they could to get people taking out mortgages.

Paying rent IMO, is paying for a temporary service. The word temporary is important. Unlike many other EU countries, there are very few long term securities for renters. There is nothing to stop your landlord asking you to leave at a month's notice.

Now if you alternative to renting is purchasing a home that is within your budget and in a location convenient to you, with a view to staying there long term (along with the other aesthetic values of having a home) and purchasing is a viable option, then yes, renting is dead money when compared with your alternative.

While we are in a downturn its very easy to get a rental property that suits you. But you only have to cast your mind back a few years to recall the massive queues for property rentals that plagued Dublin.

Financial difficulty can affect anyone. If you tell your landlord that you need a few months grace on your rent as you lost your job, will he/she be sympathetic? I know Im not. I'd give them the boot as soon as they cant pay. Banks have more flexibility in that area.

For all intents and purposes, you own the house your purchase. In the event the you default on your loan the bank can repossess your home as a last resort. its no different than a hire purchase agreement on a car.

If you die or if you get a serious illness, there is no gain for your beneficiaries when you live in a rental property. However your insurance arrangment covers your mortgage in the event of death and depending on your cover, in the event you contract a serious illness. Again, the idea of your home being a long term investment is all part and parcel of this.

Some of the cons of renting:

* there law isnt that thorough when it comes to keeping a property well maintained. As long as an issue isnt life threatening, there is no incentive to make a landlord sort issues out.

* Interior decoration is usually at the discretion of the landlord/owner. Sure, you paint the house I rent you if you like, put thats dead money for the renter if you ask me. Ill deduct it out of your rent if you wish, but the landlord is making the gain here.

* Landlord wants you to leave, auf weidersehen!

The above points, while there is some legislation around them, there isnt enough.

at the end of the day, the person in the position with the choice to rent or buy has to make an educated decision that suits his/her circumstances. There is nothing wrong with renting as a lifestyle choice nor is there anything wrong with buying as a lifestyle choice as long as its the right decision for you for your circumstances.

kippy

faceman wrote: »

Um, lots of the points and comparisons being put forward isnt relevent.

The term dead money is the wrong phrase to use when discussing the payment of rent.

When you purchase your home, you are also purchasing a long term asset. Unfortunately the last 10-15 years presented Ireland with a unnatural scenario where you could buy property and sell it at a tidy profit 6 months later. The government, bankers and developers all did what they could to get people taking out mortgages.

Paying rent IMO, is paying for a temporary service. The word temporary is important. Unlike many other EU countries, there are very few long term securities for renters. There is nothing to stop your landlord asking you to leave at a month's notice.

Now if you alternative to renting is purchasing a home that is within your budget and in a location convenient to you, with a view to staying there long term (along with the other aesthetic values of having a home) and purchasing is a viable option, then yes, renting is dead money when compared with your alternative.

While we are in a downturn its very easy to get a rental property that suits you. But you only have to cast your mind back a few years to recall the massive queues for property rentals that plagued Dublin.

Financial difficulty can affect anyone. If you tell your landlord that you need a few months grace on your rent as you lost your job, will he/she be sympathetic? I know Im not. I'd give them the boot as soon as they cant pay. Banks have more flexibility in that area.

For all intents and purposes, you own the house your purchase. In the event the you default on your loan the bank can repossess your home as a last resort. its no different than a hire purchase agreement on a car.

If you die or if you get a serious illness, there is no gain for your beneficiaries when you live in a rental property. However your insurance arrangment covers your mortgage in the event of death and depending on your cover, in the event you contract a serious illness. Again, the idea of your home being a long term investment is all part and parcel of this.

Some of the cons of renting:

* there law isnt that thorough when it comes to keeping a property well maintained. As long as an issue isnt life threatening, there is no incentive to make a landlord sort issues out.

* Interior decoration is usually at the discretion of the landlord/owner. Sure, you paint the house I rent you if you like, put thats dead money for the renter if you ask me. Ill deduct it out of your rent if you wish, but the landlord is making the gain here.

* Landlord wants you to leave, auf weidersehen!

The above points, while there is some legislation around them, there isnt enough.

at the end of the day, the person in the position with the choice to rent or buy has to make an educated decision that suits his/her circumstances. There is nothing wrong with renting as a lifestyle choice nor is there anything wrong with buying as a lifestyle choice as long as its the right decision for you for your circumstances.

Good post faceman, very well put and some pros and cons there I would never have thought of myself.

faceman

mukki wrote: »

one thing that i'm supprised no one has mentioned about renting is..... you know exactly how much you are going to pay for the next year


when you own a house ....
your mortgage repayments bob up and down

As do rents.

wrote:

you have to repair/replace everything that break down

Sometimes your insurance covers the cost. depending on the issue, your landlord may not be as quick to do it. Plus if its your fault it broke, the landlord isnt going to pay for it.

wrote:

you have to re-paint rooms, clean gutters, put up shelves, tighten screws, unblock sinks, buy more furniture, put up pictures, fix leaking tap.

I could be wrong, but dont you also need to have furniture if you are renting too? I mean there is nothing wrong with using someone's else furniture but alot of renters chose to have their own.

Also many people who own homes are house proud and enjoy the maintenance and decoration of their home.

wrote:

i have not had a day off since we moved in

if i was renting i would be on the playstation on my days off

You should have got an Xbox so!

irish_bob

Firetrap wrote: »

It is what has landed us in the mess we're in. Pure and simple.

indeed

loosing your job isnt in itself such a big deal , the problem in this country was people had so much debt, loosing a job was unthinkable , now multiply that by 300,000 and you have national bankruptcy


ps , when property reaches the bottom which i reckon will take at least another three years , it will not be nessceserry to take out 35 year or even 25 year mortgages , the lower the price , the shorter term mortgage required which is why its more sensible to sit it out and rent during a boom

Kipperhell

BraziliaNZ wrote: »

My solution to this is to retire abroad in the sunshine baby!!

That is a plan not a solution It relies on being able to live on less money in another country indefinitely. As ex-pats from Britain in Spain discovered this has risks. Your risk to take but don't think that means you are smart just decided to take a different risk.

ntlbell

Kipperhell wrote: »

That is a plan not a solution It relies on being able to live on less money in another country indefinitely. As ex-pats from Britain in Spain discovered this has risks. Your risk to take but don't think that means you are smart just decided to take a different risk.

you would be living in a cheaper country on the same money no?

e.g. your pension? state or otherwise

Kipperhell

ntlbell wrote: »

you would be living in a cheaper country on the same money no?

e.g. your pension? state or otherwise

If that country stays cheaper while you are retired and the Brits discovered this is not the case in Spain. You are not instantly able to get your state pension paid to another country either. Retired means fixed income generally. There are people who moved to Ireland to retire and they have be crucified over the last few years

When you are older you might find you need more medical attention so I hope that great country where it is sunny and cheap eternally also has a good medical service! That is not even considering family and friends. I find retired people like to be close to their children, grand children and life long friends. It sounds like youth not considering the practicalities of such plans. Very akin to the brickie who leaves school at 16.

Electric Sheep

Kipperhell wrote: »

I would consider a 25 year mortgage to be standard so that puts the age limit at around 40 and pushing it to 45 if you can afford a 20 year mortgage. Some people will be finished their mortgages by that point and not have paid money on rent. If you intend on buying rent can be seen as dead money. I saw quite a few people in their 30s very worried about missing the chance to buy.

I bet they are laughing now though. Within another year they will be able to buy a place at half the price of 3 years ago, on a 15 year mortgage if they have any sense, have it paid off in 15-20 years, while the mugs with the 40 year mortgages are paying for their house for the rest of their lives!

Kipperhell wrote: »

The recent market volatility in the market has pretty much wiped the value of most pensions. As Allen Carr said " Anybody out there retiring in the next few years, let me tell you that you aren't" That was one of the reasons why so many people went for property investment as it gives a more tangible investment they felt in control of. Even subsidising renting property can seem like a better pension plan.

And again, those who went in for property investment as a retirement strategy are even more ruined than those whose pensions fell. The illusion of control is not much good when you are stuck with property you can neither rent nor sell. Not such a good strategy after all..

ntlbell

Kipperhell wrote: »

If that country stays cheaper while you are retired and the Brits discovered this is not the case in Spain. You are not instantly able to get your state pension paid to another country either. Retired means fixed income generally. There are people who moved to Ireland to retire and they have be crucified over the last few years

When you are older you might find you need more medical attention so I hope that great country where it is sunny and cheap eternally also has a good medical service! That is not even considering family and friends. I find retired people like to be close to their children, grand children and life long friends. It sounds like youth not considering the practicalities of such plans. Very akin to the brickie who leaves school at 16.

I don't think there's many that could be worse than the rip of republic, but granted.

I would also imagine it would be _really_ difficult to find somewhere that has worse medical care than here.

you're talking about a country that stopped sending sample's to get tested leaving people to die to save a very small amount of money.

kippy

ntlbell wrote: »

I don't think there's many that could be worse than the rip of republic, but granted.

I would also imagine it would be _really_ difficult to find somewhere that has worse medical care than here.

you're talking about a country that stopped sending sample's to get tested leaving people to die to save a very small amount of money.

Just gonna pull you up on one point:
There are literally hundreds of countries with much worse medical care than here. We're by no means the best but by God we are a long way from the bottom.

faceman

kippy wrote: »

Just gonna pull you up on one point:
There are literally hundreds of countries with much worse medical care than here.

True, its called the third world!

DJDC

I already have but I will reiterate: flexibility.

Restricting oneself to one place at a yougn age impairs earnings and experience. To do so is both a failure of foresight and ambition.

Salvelinus

The fact that Ireland had an unsustainable, crazy property market should be taken into account.

Kipperhell

Electric Sheep wrote: »

I bet they are laughing now though. Within another year they will be able to buy a place at half the price of 3 years ago, on a 15 year mortgage if they have any sense, have it paid off in 15-20 years, while the mugs with the 40 year mortgages are paying for their house for the rest of their lives!

No they aren't laughing because they now see that they will never own a property. They see that the reality is they can't borrow the money now either. People can service mortgages but can't get the money. There maybe people with 40 year mortgages but it is far from normal

Electric Sheep wrote: »

And again, those who went in for property investment as a retirement strategy are even more ruined than those whose pensions fell. The illusion of control is not much good when you are stuck with property you can neither rent nor sell. Not such a good strategy after all..

Actually completely wrong! It is a long term investment and it is the people who bought them as short term who are ruined. If you can own a property for less than a 100 a month over 20 years the chances are it will be worth more than investing the money in shares. There are people who made bad investments but there is nothing wrong with the strategy. You don't say the whole stock market is pointless because people invested in bank shares and lost a fortune. I would still rather have a property with revenue coming in and be in negative equity rather than simply have lost the money. If you bought the right property you will always be able to rent it. Once you own a rental property out right the revenue from it tends to stay in line with inflation unlike most pensions.

ntlbell

kippy wrote: »

Just gonna pull you up on one point:
There are literally hundreds of countries with much worse medical care than here. We're by no means the best but by God we are a long way from the bottom.

There is, how many of them are popular destination's for irish OAP's tho?

Salvelinus

Kipperhell wrote: »

No they aren't laughing because they now see that they will never own a property. They see that the reality is they can't borrow the money now either. People can service mortgages but can't get the money. There maybe people with 40 year mortgages but it is far from normal



Actually completely wrong! It is a long term investment and it is the people who bought them as short term who are ruined. If you can own a property for less than a 100 a month over 20 years the chances are it will be worth more than investing the money in shares. There are people who made bad investments but there is nothing wrong with the strategy. You don't say the whole stock market is pointless because people invested in bank shares and lost a fortune. I would still rather have a property with revenue coming in and be in negative equity rather than simply have lost the money. If you bought the right property you will always be able to rent it. Once you own a rental property out right the revenue from it tends to stay in line with inflation unlike most pensions.

But had they bought at the height of the pyramid wouldn't they be in a crap situation, who wants to retire in a crap apartment? I know the point you're trying to make and it's valid in a normal economy, Ireland didn't have that.

kippy

ntlbell wrote: »

There is, how many of them are popular destination's for irish OAP's tho?

Okay, was just pulling you up on your sweeping statement.
That said, the States aint cheap to get looked after in.

Kipperhell

Salvelinus wrote: »

But had they bought at the height of the pyramid wouldn't they be in a crap situation, who wants to retire in a crap apartment? I know the point you're trying to make and it's valid in a normal economy, Ireland didn't have that.

But how many people did buy at the top of the "pyramid"? Good business sense on an investment property would consider both drops in rent and reduction in property value in the market. Long term view was vital. How many people are actually stuck in crappy apartments until retirement?

People are confusing the hight of the market with everybody who bought property over the last 10 years. Only a relatively small portion of people are in trouble because in the last two year the entire property stock did not get bought and sold. Ireland's economy was not that unusual and has acted as generally expected so is/was normal. I said it already but people think the present will not change but also don't expect it to keep on going as is.

I lived through the 80s and will live through this. The world wide recession is different as there is no where to run. I know people who took the profit from property sales and then lost it on the stock market. There is a very limited view being expressed on these pages.

Salvelinus

Kipperhell wrote: »

But how many people did buy at the top of the "pyramid"? Good business sense on an investment property would consider both drops in rent and reduction in property value in the market. Long term view was vital. How many people are actually stuck in crappy apartments until retirement?

People are confusing the hight of the market with everybody who bought property over the last 10 years. Only a relatively small portion of people are in trouble because in the last two year the entire property stock did not get bought and sold. Ireland's economy was not that unusual and has acted as generally expected so is/was normal. I said it already but people think the present will not change but also don't expect it to keep on going as is.

I lived through the 80s and will live through this. The world wide recession is different as there is no where to run. I know people who took the profit from property sales and then lost it on the stock market. There is a very limited view being expressed on these pages.

I'd say more than a small proprtion are in trouble. You said earlier that alot of people rented because they couldn't afford to buy not because they predicted the collapse; that's true but the reason they couldn't buy was the ridiculous bubble.

The_Conductor

Guys- we have a very liberal moderating policy in this forum- based on the presumption that regardless of whether we agree with each other or not, we respect each other as individuals. Be polite and considerate towards each other. If you disagree with another posters point of view- refute the post, without getting personal. If you cannot live with this simple tenent, do not post in this forum. I will unilaterly ban people who are incapable of following this simple rule.

bladebrew

i would love to own a property,but at the moment for me and the g/f renting makes sense,it is a lot of money to pay out but as people said it gives a certain freedom,im 24 and not exactly rich so i doubt i could even get a mortgage if i wanted to!
people who own their own homes that keep saying "rent is dead money" drive me mad!!
paying for a hotel is technically dead money aswell!,you leave the next day down a few quid with nothing to show for it!,

davyby

Quote from the website propertypin.ie

Remember the good ol' days when you could buy a house and tell everyone who would listen that you made thousands since you bought it, and that it was definitely the right decision to buy when you did as the second phase was more expensive.

Typical conversation at the time with Barny bloggs, before he learned to only speak about property when spoken to at social gatherings.

Me: But this is a manic bubble, it's gonna crash.

Them: You're just jealous you didn't get on the ladder in good time, besides look at you, you're paying someone else's mortgage and rent is dead money.

Me: Ah, but my rent is x amount less than your mortgage and the money I'm saving goes towards stocks that pay a healthy dividend, pension and other non property fund.

Them: You just want to stop me making money and making something of my life, you just want a crash so you can buy a house for nothing.

Me: Yeah, that's the plan, buy a house mortgage free, I'm expecting falls of 50% and more in some places.

Them: I suppose a stopped clock is right twice a day, you're going to be waiting a long time, no, there will be a soft landing, the banks and government won't let a crash happen, they can't.

Me: Nah, they will be powerless to do anything about it, always happens, housing bubbles last about 15/18 years and ours is getting long in the tooth.

Them: You're just a doom-monger.

Me: Sure, we'll have to agree to differ then, anyway how is Mary...{changes subject fast}

These days no-one mentions property any more....I suppose people never talk about losses. Barny bloggs learned the hard way about investing having had most of his gains wiped out in the dot com crash.

Electric Sheep

davyby wrote: »

These days no-one mentions property any more....I suppose people never talk about losses.

And thank god for that. Irish people had become the most boring in the world, incapable of carrying on a conversation about anything else.

London Irish

Kipperhell wrote: »

Take the person who has been renting for 7 years was 25 when they first rented. So they are 32 now probably best to wait another 2 years making them 34 when they get a 25 year mortgage if they are lucky.59 when they pay off their mortgage but others will be 50 having 15 years to increase their pension fund versus 6. I guess you could be saving the whole time but we know most don't do this.

This is exactly the situation I'm in! And I rent.

This was the exact dilemma I faced back in 2002. I had a substantial amount of money from a redundancy payment that I got from a dot-com bust company. Shall I travel, I wondered ,or finally buy a house? I bought my backpack and left the country. I didn't do the Thailand-Oz route - instead spent months in China, went to the far end of Laos and trekked all over Nepal, amongst other things.

Why? Because i felt that there was very little point in having a house in Ireland when I felt there was a substantial risk that things would go tits up - and take the economy with it. Oh I could done a BTL, but there seemed little point - interest rates were historically low, crazily so in the context of the long term. Of course, I didn't know that the current economic situation would happen, only that I felt it was very highly likely after looking at other examples in the world.

So I wanted to see just what was so special about China as an economy, and other things. And when I stopped traveling, I worked.

So now I have a varied CV that shows flexibility and international experience. If I was back in Ireland, I'd be 7 years into my mortgage, looking at my industry being decimated in Ireland over the next 5 years, and competing with everyone else who is heading for the exit, with a CV that had a big "I ONLY EVER WORKED IN IRELAND" stamp on it. I might make it ok. I might not.

It really is down to how you look at the situation, opportunities and risks in front of you. I felt renting allowed me the flexibility to get to where I am today. And in the next 2-3 years I'll probably buy.

One other more simple way to look at your example. In 2002 I earned x euros. In 2009 I earn 2x euros (excepting fx variations...).

But at both points in time the house in your example is costing the same 100K.

But I have now a big deposit ("I guess you could be saving the whole time but we know most don't do this"). So I might go for a 20 year mortgage with low repayments relative to my disposable income.

If I had stayed in Ireland, I could have bought in 2002 for 100k and now be earning 2x too. But can I now re-mortgage to shorten my 25-30-35 year mortgage? What deposit did I have at the time? What was my original LTV?
Did I trade up?

There's a whole range of answers here and for some people your example about is going to hurt a lot and bring home the renting-vs-buying situation to them, when they look at their situation. And for others, they won't blink an eye.

davyby

Too true E sheep.. we our now the now proudest owners of of neg equity morgages in europe..sumtin to chat over at BBqs ..:)

dearg lady

davyby wrote: »

Remember the good ol' days when you could buy a house and tell everyone who would listen that you made thousands since you bought it, and that it was definitely the right decision to buy when you did as the second phase was more expensive.

Agreed, incredibly annoying!!! But I think it's equally silly people saying, well I didn't buy, instead I rented and by doing this I've saved myself x amount. Unless it's money in your pocket ya aint saved nothin!! And that goes for both situations

The_Conductor

dearg lady wrote: »

Agreed, incredibly annoying!!! But I think it's equally silly people saying, well I didn't buy, instead I rented and by doing this I've saved myself x amount. Unless it's money in your pocket ya aint saved nothin!! And that goes for both situations

I agree it is silly.
What is very astute though- is renting property that you could never aspire to own- and thus by renting, having a standard of living far superior to that you could normally aspire to on whatever your salary might be.

dearg lady

smccarrick wrote: »

I agree it is silly.
What is very astute though- is renting property that you could never aspire to own- and thus by renting, having a standard of living far superior to that you could normally aspire to on whatever your salary might be.

Definitely, it's about weighing up the pros and cons for yourself isn't it.
For me the deal breaker was livin a reasonable distance from the city centre, which I do. But now I kinda wanna live closer again! So I do have some regrets about buyin but probably 95% of the time I'm happy with my decision. But I can understand why people like the flexibility so much. I hope when my contract in work finishes to be able to rent the place out and have some flexibility myself. Owning is definitely not the holy grail, but it works for some people, and as much as renters shouldn't be berated with the 'rent is dead money' stick people who bought and had bad luck shouldn't be sneered at either.

The_Conductor

dearg lady wrote: »

Definitely, it's about weighing up the pros and cons for yourself isn't it.
For me the deal breaker was livin a reasonable distance from the city centre, which I do. But now I kinda wanna live closer again! So I do have some regrets about buyin but probably 95% of the time I'm happy with my decision. But I can understand why people like the flexibility so much. I hope when my contract in work finishes to be able to rent the place out and have some flexibility myself. Owning is definitely not the holy grail, but it works for some people, and as much as renters shouldn't be berated with the 'rent is dead money' stick people who bought and had bad luck shouldn't be sneered at either.

Unfortunately the Irish in particular, have a particular fascination with property ownership- probably dating back to our historic dispossession and the plantations etc- I know its 400-500 years ago- but the psychological impacts of it, are alive and well in the mindsets of many. People will beat up with the renters- with the 'dead money' argument- and owners will not admit that their 2 hour commute morning and evening is slowly killing them- people are like sheep- and do not like to stand out from the crowd.

mental07

It's not dead money to me. It gives me a roof over my head and my independence. That's enough for me for the moment.

nohatnoswim

whizzbang wrote: »

Airplane flights are dead money, why are you paying the airlines loan repayments?

Absolutely !

Instead of buying a flight, you should get a mortgage and buy your own airplane. The, buy an oil company to put petrol in it cause buying petrol is dead money too. Then buy a service company to keep the whole thing running. The buy the airport authority so you don't pay them fees for storing the airplane and using the runways. Mortgage the lot of it......otherwise, you'll be paying for the flight - and that's just dead money.

Buying any service is just that - buying the service. The concept of needint to own the service itself is hardly always the best option ?

I've been living in houses worth 1m+ for the past 2 years, renting. Why would we live in a shoebox in Ongar with what we could mortgage on and have similar mortgate payments to our current rental payments ?

lol !

The_Conductor

nohatnoswim wrote: »

Buying any service is just that - buying the service. The concept of needint to own the service itself is hardly always the best option ?

The problem is the average Irish person has aspirations of being Richard Branson- and they most probably do aspire to owning their own airline, their own railway, their own chain of music stores, etc. Few are familiar with some of the less auspicious speed bumps along his journey- such as his conviction for tax evasion early on in his career.

Those who did not have to live through our bankruptcy in the 80s- and do not remember our previous status as a one step above 3rd world banana republic whose principle export was its people, have all sorts of expectations of wrongs being righted, and illusions of Ireland as an inherently wealthy country simply fallen on bad times who is going to get off its knees and be restored to its rightful place alongside Leichtenstein, Switzerland, Luxembourg and other erstewhile tax havens again.......

Ireland is going to have to reinvent itself- and rebuild itself from the bottom up. We certainly have the capacity to do this- but do we have the willpower?

Sir Oxman

Long time renter here too - and it suits me down to the ground.

I've heard every shade of the 'dead money' crap over the past decade or so, mainly from excitable late 20's-30's people who couldn't believe their luck the banks had offered them 100% mortgages over 40 years for a shoebox in that always exclusive development withing commuting distance (ie 2hours) of the city.

There was no talking to the poor suckers, and I do feel sorry for them.

PS This is not a put down to those who own, I have absolutely no interest in owning since selling up 12 years ago and travelling about.
But I am sick of hearing this 'dead money' lark - away with yis!

di2772

I bought my house in 1995. Its all paid off long ago. We had a 25 year mortgage but had it paid off in 15.

I would have always thought of rent as dead money.

Its great to not have to shell out for rent every month, and to be told to move by a landlord at any time.

But i suppose if renting suits you then you wouldnt think of it as dead money at all. Its different for us all.
I loved renting when i was young, free and single with no kids.

Try having kids at school and renting.


Owning home Pros for me:
I dont have to pay rent at all.
The kids have a home that they wont have to move out at a landlords whim. And they have a 15 minute walk to school.
You can decorate whatever way you want.
You can buy whatever appliances you need yourself instead of a landlords cheap stuff.
Never have to write 50 letters again telling companies where i have moved to.


Cons.
There is maintenance. About €1000 a year when i averaged it out over the years.
Mowing the lawn. I hate that.
Probably property taxes to come in.

Sir Oxman

That's great - you actually own your home, I would guess the majority of mortgage holders don't (some never will) plus the majority have to shell out monthly just as renters do.

I have a mate and his wife who are just 5 years from owning their home - I think it's great and they think it's great that I rent and that it suits me completely.

We could pro and con all day, but as other posters have said it is what best suits an individual or individuals (single/partners/family etc)

I don't know where you get the 'told to move at a landlords whim' bit from - there are rules and regulations governing leases.
Also, I've rented all over Dublin, Holland, Germany and never took a place that had cheap landlord tat as furnishings (I know what you mean though - there are people with mortgages who furnish their place with tat too!)

I can pick and choose (yes, even in the 'good' times) and in this day and age, also follow the jobs if needs be.

di2772

gambiaman wrote: »

That's great - you actually own your home, I would guess the majority of mortgage holders don't (some never will) plus the majority have to shell out monthly just as renters do.

I have a mate and his wife who are just 5 years from owning their home - I think it's great and they think it's great that I rent and that it suits me completely.

We could pro and con all day, but as other posters have said it is what best suits an individual or individuals (single/partners/family etc)

I don't know where you get the 'told to move at a landlords whim' bit from - there are rules and regulations governing leases.
Also, I've rented all over Dublin, Holland, Germany and never took a place that had cheap landlord tat as furnishings (I know what you mean though - there are people with mortgages who furnish their place with tat too!)

I can pick and choose (yes, even in the 'good' times) and in this day and age, also follow the jobs if needs be.

I thought the majority of home-owners actually do own their own homes outright, with no mortgage left at all. And another huge chunk of them dont have very little outstanding on their mortgage.

Why does everyone think that most people bought their houses in the last 5 or 6 years?

Its recent buyers, recent investors and people who topped up that are going to be struggling.

If your landlord wants you to move, you'll be moving. Reading the rules and regulations you are talking about will reveal this to you.

You are right about picking and choosing though. Id love to be able to do that.
With a zero mortgage you would think i would be able to do that, but i cant. I have a family.

Sir Oxman

di2772 wrote: »

I thought the majority of home-owners actually do own their own homes outright, with no mortgage left at all. And another huge chunk of them dont have very little outstanding on their mortgage.

Why does everyone think that most people bought their houses in the last 5 or 6 years?

Its recent buyers, recent investors and people who topped up that are going to be struggling.

If your landlord wants you to move, you'll be moving. Reading the rules and regulations you are talking about will reveal this to you.

You are right about picking and choosing though. Id love to be able to do that.
With a zero mortgage you would think i would be able to do that, but i cant. I have a family.

According to this 40% outright (I don't know if that's just normal households or includes buy-to-let)

Just look at the most advanced societies in Europe having just 7% outright home ownership! (Germany, Sweden, Denmark, Netherlands)

On a whim is a tad strong though, all renters with leases are aware of notice periods as are landlords.

Course you can,
Nothing is impossible (except maybe selling the gaff) <--;)

jhegarty

You can only answer the question when you know:

1) Average rent rates over the next 30 years
2) Interest rates over the next 30 years
3) House prices in 30 years time

Only someone who knows all these facts can answer which is better.

MG

jhegarty wrote: »

You can only answer the question when you know:

1) Average rent rates over the next 30 years
2) Interest rates over the next 30 years
3) House prices in 30 years time

Only someone who knows all these facts can answer which is better.

Not necessarily - in the short term it is obvious that house prices will fall for the next 12 months and most likely well beyond. As long as house prices are falling by a reasonable amount (rule of thumb, in excess of your rent) , the short term rent or buy decision is a no brainer.

You are correct in a general sense that the rent or buy decision is dependant on when you buy and when you sell. The only thing we can say for sure is that now is not the time to buy.

For me this is not a question of which is better, it is a question of timing.

Rybka

You are all traitors!!

You should all buy a house on a 35 year term.
You should all buy a house a at 5x+ your current salary.
Think about an investment property.
House prices always go up.


What could possibly go wrong?

beeno67

davyby wrote: »

Quote from the website propertypin.ie



Me: But this is a manic bubble, it's gonna crash.

Them: You're just jealous you didn't get on the ladder in good time, besides look at you, you're paying someone else's mortgage and rent is dead money.

Me: Ah, but my rent is x amount less than your mortgage and the money I'm saving goes towards stocks that pay a healthy dividend, pension and other non property fund.

.

So that's all the savings down the toilet with the stock market crash. You should have invested in property. It hasn't done nearly as bad:D

gurramok

di2772 wrote: »

I thought the majority of home-owners actually do own their own homes outright, with no mortgage left at all. And another huge chunk of them dont have very little outstanding on their mortgage.

Why does everyone think that most people bought their houses in the last 5 or 6 years?

Its recent buyers, recent investors and people who topped up that are going to be struggling.

Think you'll find all those recent buyers(non-investors) were mostly younger people under 40.
Its the older generation that are mortgage free, with inflation helping them along the way.

If your landlord wants you to move, you'll be moving. Reading the rules and regulations you are talking about will reveal this to you.

You are right about picking and choosing though. Id love to be able to do that.
With a zero mortgage you would think i would be able to do that, but i cant. I have a family.

A landlord can only kick you out if he sells or wants to move a family member in.
Funny you say that about the kids, i was just in an apt of a renter yesterday and its across the road from the primary school, very handy for the parents!

kmick

I think renting is probably the right decision right now and will be for some time to come. Everyone could see that when a 4 bed semi in Rathfarnham was costing 1.3 million we were all in trouble. There has been a massive correction to date but there is more to come - maybe not quite as much as what has come before it but

However there are a few stats to keep in mind.
About half of the homeowners in ireland do not have a mortgage.
Of those homeowners with a mortgage about 20% are in negative equity i.e. those who bought in the last 5 years. So about 10% of home owners are in negative equity. Most of these are younger people so even though their plans of moving on to something bigger in 3 years are gone they do have longer to sit it out.

The one point I would make is that negative equity is just the opposite of what people experienced in the boom i.e. a notional value that cant be realised until you sell. If you dont sell then you dont lose out. Its inconvenient but not terminal. Just dont lose your job or get divorced any time soon!!!

faceman

smccarrick wrote: »

People will beat up with the renters- with the 'dead money' argument- and owners will not admit that their 2 hour commute morning and evening is slowly killing them- people are like sheep- and do not like to stand out from the crowd.

This drives me mad - why do people assume that any young people who buy property have a 2 hour commute to work every day? They have trains/buses/luas in the suburbs and even the commuter belt too! It also assumes that canal ring of Dublin is the be all and end all of irish life.

MG wrote: »

Not necessarily - in the short term it is obvious that house prices will fall for the next 12 months and most likely well beyond. As long as house prices are falling by a reasonable amount (rule of thumb, in excess of your rent) , the short term rent or buy decision is a no brainer.

Define short term? Vast majority of people who buy a house do so as a long term decision.

The_Conductor

faceman wrote: »

This drives me mad - why do people assume that any young people who buy property have a 2 hour commute to work every day? They have trains/buses/luas in the suburbs and even the commuter belt too! It also assumes that canal ring of Dublin is the be all and end all of irish life.

Not all do- I am simply drawing attention to the manner in which towns even west of the Shannon and in Waterford and Wexford to the South and Dundalk in the North- were sold as being Dublin commuter towns. I'm personally familiar with one girl doing the exact opposite- she commutes from Dublin to Athenry on a daily basis. I used have a 2 hour commute each way- I exchanged it for half with a new job, and am in the process of shaving another chunk from it.

faceman wrote: »

Define short term? Vast majority of people who buy a house do so as a long term decision.

In general when talking about property- the short term would be viewed as 5-7 year period, the medium term between 7-20 years and the longterm periods in excess of 20 years. These are only rules of thumb though- different people will have different definitions.

faceman

smccarrick wrote: »

Not all do- I am simply drawing attention to the manner in which towns even west of the Shannon and in Waterford and Wexford to the South and Dundalk in the North- were sold as being Dublin commuter towns.

How EA and developers got away with shenidigans like that is unreal but hopefully those days are over

wrote:

In general when talking about property- the short term would be viewed as 5-7 year period, the medium term between 7-20 years and the longterm periods in excess of 20 years. These are only rules of thumb though- different people will have different definitions.

Exactly. Therefore short term for renting and purchasing are vastly different time scales thus need to be distingushed