Pros and Cons - buying as opposed to renting

Buying as opposed to renting.  Following on my previous blog regarding applying for a Government housing concession we look further into the pros and cons. This is not a short term question as sometimes people are in between jobs, looking at work changes and so on, and that is not the time to go hunting for buying a home unless one can afford to keep it to realise some gains. Whether we like what we see when we look forward, it is still a good thing to imagine a person's world that seems to change every ten years or so.  In my mind I prefer to look at what life will look like when we are around retiring age, and I get a bit taken back when I think of what the pension, and health of a person would look like, and how much more of the income would go into health related services that just did not seem important in the prime of life!

Recently I have witnessed a person who is in the last ten year phase of their working life and who has chosen not to buy a home, and whose rent has risen to a figure not much different to half of their weekly pay.  Unless there is an inheritance it will be hard to get established and ready for retirement.  While maths was not my favourite subject I can still do simple arithmetic, for example, 52 weeks x $400pw is easy then times 25 years (or proportionately breaking down the rent a bit further), plus the removal costs, the bonds and so on. Of course there can be little blips along the way to overcome whichever way the senario is looked at.

Pros -

1. The mortgage payments will add up to give the payee enough security (collateral to move on if necessary).

2. Those mortgage payments will not be lost providing the investment is sold on a solid real estate market.  It is not always an up market just at the time one wants to sell, and some patience will be required, as there is no point in making irrational decisions. 

3. Yes, a market is a market, and the idea with all investments is to ride out the highs and lows, and nothing is lost until the "hammer goes down" at the Auction.

4.  There is a choice of renting out the investment and renting elsewhere, if circumstances change and the location does not suit, or a job transfer comes about.

Cons -

1.  A home needs to be maintained and that can be hard in the early stages of the mortgage term and repayments in relation to income may not look that great.

2.  Taking on a bit of part time work to increase the weekly cash flow.

3.  Another one of my blogs does go into looking at extra expenses for a home owner.

4. The landlord can arrive or send a message with the agent "this house/flat/unit will be listed on the market for sale in two weeks" and then this horrible period of chasing a rental, packing, moving stuff, changing addresses, disconnecting and connecting services commences.

Finally, it is noticed that a long time investment home does not stir the owner into change as quickly as when a new owner comes along having borrowed a heap of money, and wanting the tenant to pay off the mortgage with the weekly rental. Yes, the old owner may now have paid off the property, whereas the new owner has started with a fresh mortgage and a large debt to repay.