Vendor finance vs Rent
This is similar to your rent money going nowhere (dead money) compared to Vendor Finance where you are purchasing a home and the money is going in to purchase your home.
As a homeowner, you build your equity through paying down your vendor finance payments over the years. If successful, you will likely enjoy a lower cost of living retirement. Renting. If you anticipate a career or job change renting can hinder your flexibility to pick up and move.
Are you undisciplined? Buying a home acts as a forced savings.
Buying could be the start of your wealth accumulation.
If you want to paint your walls green – you can!
Once your mortgage is locked in you can reasonably budget for your monthly repayments as they won’t change all that much. Your landlord can’t put the rent up on you either.
It will give you a sense of stability. It’s your home so you can’t be kicked out or forced to move.
Home loan repayments are usually more costly so when you rent you will have more money in your pocket to spend on other things.
Carefree living. The plumbing broke? Your blinds need replacing? No problems, as that is all taken care of by the landlord, including rates and insurance.
Are you a floater? Is your family growing? If you like moving around then renting could be ideal for you. At the end of a 6 month lease you will be free to move onto wherever you like. Also, if your family is increasing and you need more room you can easily rent a larger place without having to buy a new home.
As monthly rent is still generally cheaper than monthly mortgage repayments, this will open up more options when it comes to deciding where to live and the size of your home or unit.
BUYING A HOUSE: THE PROS
It gives you stability and freedom.
Buying a home provides you with certainty; there's no risk that you'll be displaced by a landlord. Tenants have very little say in how long they can occupy a rental property beyond the lease term. Living in your own home also allows you the freedom to renovate and decorate your home as you please.
“Rent money is dead money” or so the saying goes. It’s a popular myth perpetuated by plenty of people in the real estate industry. But when we did the sums, the reality was quite different.
The Reserve Bank of Australia (RBA) recently had similar findings to us: that since 1955, there hasn’t been much difference between renting or buying. Despite the constant news of property booms and million dollar sales in suburbs not known for being expensive, owners and renters over the last 60 years ended up in roughly the same place. That of course relied on renters being equally disciplined about saving, and investing those savings outside of cash deposits.
Pros of buying
- The appreciation (rise) in house prices over time. It’s hard to miss the stories that house prices have been rising, and fast over the past couple of years. The average Sydney property has risen 26% since the start of 2013 and other major cities haven’t been far behind. That’s great news for those that own. But while house prices have consistently risen over the long-term, they can also have periods of weak growth or even fall in value.
With Vendor Finance you are the homeowner and yes you can paint the house the colour you want and also you can renovations – providing you have council approval.
On page 65 of The Aussie Wrapper’s Complete Guide there is The Mathematics of the Wrap all explained to you on how you make you Positive Cash Flow from day 1.
To Your Success
The Aussie Wrapper