USER COMMENTS >");
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document.write("You raise some good points, I agree now is the time to rent as you can rent a lot cheaper than buy. So you can stay in a better place. However not getting into the market at all is not wise. My suggestion to anyone who does not own property is to get into the market in 08/09 as its a buyers market and good deals are a plenty now. Dont look for a home for yourself, look at buying for starters an investment property. This will no doubt be in an area you would not want to live, maybe not even want to visit. However these have great yields.
The thing about property is that unlike buying shares you can do so with no money down. Use bank finance buy good deals, rent them out so they become
cash positive (no monthly shortfall) and the amount you can buy for is almost unlimited. Also shares dont pay you monthly income. Cant say that for shares.
. Brennan Carey");
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Missing one fundamental point
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document.write("You do make some good points, but one thing you have failed to mention is that buying property is attractive due to gearing. With very few other investments, can one gear themselves to the extent they can with property, earning acceptable returns, using in effect someone elses ( the bank's ) money. Many other investment might yield more, but the ability to use property as collateral against ones borrowing, enables one to invest much larger amounts. Josh Cohen");
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Property returns
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document.write("You do raise some good points, particularly about the \"home\" buyer. Many people in this country borrow every last cent they can get from the bank to get the most expensive house they can afford, whereas they could rent that house for a lot less than it would cost to buy it. I agree this is probably not very astute, but we must all remember that buying a home is not an investment, it's a lifestyle choice as much as buying a fancy car is, or having expensive overseas holidays. If you're lucky, your home will appreciate in value in the longer term and you will still see an overall positive return, even if it's not as good as the stock market. And having said that, there are few people out there who would take the cash they save through renting and not buying, and invest it in the stock market or a business (it would probably go to those lifestyle choices I mentioned earlier). And unless you've got a flexible landlord, you can't do much to your rental pad - chances are, you can't change the paint colour of a pink bedroom, or redo an ageing bathroom, or develop a lovely garden that is your own personal little haven. And if you do, you won't see a cent of your investment back when you move out. And talking of moving out, moving costs are not cheap and people do get attached to the \"homes\" they live in (owned or otherwise) and that flexibility you mentioned about moving out any time can work against you if the landlord gives you notice after you've envisioned yourself settling down there for the next 10 years.
As for property \"investment\" - well, that's a totally different story and I am afraid I must disagree with you on that front. As Josh who commented before mentioned, gearing is the most powerful tool available to the property investor. You cannot gear shares to more than 40% and you cannot rent shares out to get a return to cover your interest payments. With dividend yields around 3%, you won't cover a quarter of your interest payments through shares, and history has also shown that property prices are MUCH less volatile than shares. That's not to say you can't lose money and make mistakes, but for the cautious investor who is not a speculator but a long term investor, you can make returns in excess of 100% per annum. The stock market has returned an average of 18% or so over the last 20 years. So, if I had a million rand right now, what would I do? I'd buy a couple of properties and put down sufficient deposits to break even, and I'd stick the rest in shares. Bottom line is that by gearing a portfolio and diversifying your investments, you can achieve much greater returns over the longer term.. AB");
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Credit Record
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document.write("You do need a half-decent credit record to rent. Or, so they say. I prefer to rent from private people, not agencies.. Joy-Mari Cloete");
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Nice article...until you retire
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document.write("You forgot one important thing: my house is almost paid for and after that I live for the cost of water and lights and occasional maintenance - FAR cheaper than renting! Owning my house means I could retire at 40 if I want because I won't need to blow huge amounts per month on rent. If I were only renting, I'd have to wait till at least 55 to retire so that my retirement funds would be sufficiently padded to cover the additional expense. Plus, I wouldn't have an asset to sell to cover things like frail care, etc. (Try finding a unit in an retirement village to rent.) Renting might seem sensible in the short term, but owning a house gives you much more financial freedom in the long term. I guess buying a house is like retirement planning...it seems pointless and onerous to the young, until they get old and realise what a big mistake they made all those years ago by opting to spend money on 'fun stuff'.... WTF");
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This is only the beginning
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document.write("A fair article, and I'm not just saying that because I'm renting a beautiful apartment in an art deco building in Cape Town that I could never afford to buy in a million years.
Just a comment about the strange belief currently being pushed by estate agents and vested interests in the media that our property market is going to start recovering in the next 18 months.
Anyone who knows anything about cycles knows that we are in for an absolutely horrific period. The current property bubble took about seven years to peak. To think that it's going to take 18 months to collapse is naive. Look to at least four years until the bottom, and falls of up to 60 percent.
It's happened in the US, it's happening in the UK (newbuild flats in London dropping up to 70 percent since 2006), and it's just starting here.
For all you happy renters, keep going! And if you want to buy, wait three or four years, and pick up something for cash that you can grow old in, safe in the knowledge that unlike everyone else, you paid what your property was worth.
. Happy renter");
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market cycle
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document.write("Happy renter, cycles is something we follow very closely. Yes its not gonna take a year to 2 to start correcting, much longer than that I agree. Where you are wrong however is in the timing. Did you know that the paek in the housing boom was actually in 2004? Since then the market has been going one way and that down. (I have graphs to show this, cant upload however) So now in 2008 its been 4 years since we starting going down. Its a common misconception that if you wait its gonna get better, before you know the market will have shifted and you will be missing out all over again. As I said in my initial post, if you are seeing property as an investment class its not about what a nice place you rent and if I bought it would cost me so much more. I agree its almost always gonna be cheaper to rent. However with that mindset you are never gonna own property investment or personal property.. Brennan Carey");
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Timing Is All
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document.write("One point buying a home is a lifestyle choice. I found a place i want to live and built a hosue. My house will be paid off in 5 years. Yes some sacrifice now, but in five years my accomadation will be paid and I can then increase my investments. I plan to stay in this proeperty for a long time. So short term does not worry me. I guess renting vs buying all goes to how long you stay put and how big your bond is. David");
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Why Renting Rules . . . .
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document.write("Hi Kabous,
I agree with almost all of the contents of your article \"Why Renting Rules . . .\" but want to differ on the first point in \"More good reasons to rent. U don't need a good credit record to rent. \"
I would think it is a matter of personal choice when the Landlord prefer the DIY thing. But if a Letting or Managing agency don't check on the Lessee's credit record or even run the risk of going into an agreement despite a poor credit record, then, well what can I say. Prevention is better than cure.
I'm sure you know and eve might have experience on trying to get a defaulting lessee to pay up and even worse, try the eviction route . . . Not very wise or cost evective. What can you tell us on the NCA regarding this issue?
. Harry");
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Why renting rules
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document.write("Hi Kabous
At last, someone who feels the same as I do. I am tired of always apologising for not owning propery at the age of 45 and being dictated to by society that you are a \"nothing\" if you don't own property. At least I can afford to still eat out and enjoy a good bottle of wine!. Zedre");
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Property you buy, Financial institutions use a collateral, and you never \"own\" it
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document.write("Any property investor knows that Financial institutions use the property you finance through them, as collateral for the loan. Yet, you are held accountable on maintenance, insurance etc. Rather invest in Property shares if you have to \"own\" property. I say \"own\", why? If you can't pay rates/taxes, see what the local municipality attaches 1st? So you never \"own\" the property, you literally \"lease\" it on conditions, and at the same time pay for it to appreciate (i.e. taxes) Rather go the shares route. Johan");
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