If couldn’t afford, DON’T rent, buy something you COULD afford

Someone sent me an infographic the other day about the pros and cons of renting versus buying a home. It looked interesting but when I asked, I got to know that it was done internally based on some research by asking Gen-Yers. Nothing wrong but perhaps let me write some comments based on my personal interactions with Gen-Yers, both those who love property as an investment or those who prefer to enjoy renting instead. One day, in the future, the house prices would be extremely high. So high that everyone would have no choice but to rent….. a space in a room instead. Until that day comes, it’s still best to buy.

In the infographics, the advice given was that if we do not yet have enough downpayment for the property that we want, we should rent first. Actually renting is a pretty dangerous game to play. The reason is because even when we rent, we want to rent at places where we like. Perhaps it’s the area that we may potentially buy in the future. That’s why rental in many of these ‘hotter’ spots are also higher too. Do we know WHO GAINS the most from our rental? Yes, the owner of that place we are currently renting.

Coming back to renting instead of buying. Would we try to rent as LOW as possible so that we can save as MUCH as possible? Are we sure that we would rather rent an old place so that we can save RM400 per month or more? Honestly, not many are willing to stay in flats while saving tobuy a condo. They are more likely to rent a condo instead and then found out that their savings per month is too slow compared to the potential price increase for condos in hotspots. Assuming that the rental difference between a flat and a condo is just RM400 per month. That’s RM4,800 per year and within 5 years, we would have accumulated close to RM30,000 from rental SAVINGS alone.

Hopefully, we are now jolted awake. That’s why if we could not yet afford the place we love, buy somewhere we could afford first. Oh yeah, the rental that we paid is considered a ‘loss,’ while the mortgage payments that we struggle to pay every month? That’s called, ‘owning our own home’ in the future. Slowly but surely. Do note that there’s really no such as thing as right or wrong. Some may just prefer to rent their whole lives and still be extremely happy. Some may suffer after buying their first property with never ending issues with the property. Just do what we believe is the best for us and love it. Happy thinking and deciding.

written on 10 May 2016

next suggested article:  You may not get good tenants all the time, but still proceed

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9 thoughts on “If couldn’t afford, DON’T rent, buy something you COULD afford

  1. Hi Charles

    There are many reasons why people are renting. They need not confined to those you are opinating. It certainly is not ‘total loss’ as you have so wisely contradicted yourself by concluding that there is no right or wrong reason.

    Humans are not homo-species, more so their taste and desire. Some are not interested in materialism but their own gratifications. They come in many forms. To each his own. I respect others including their lfestyle choices. Instead of an apartment they rent a condo to live the lifestyle. Whether it leads to a loss of saving or not, it is their choice. What is worse, is to impose your personal perspective of right/wrong or good/bad onto others. Having been your regular reader, you do have strong position on others adopting a different lifestyle from yours?

    Some rent because they want to stay in that locale for a year or so to experience deeper the environment, the amenities and others etc before making a purchasing decision there. Some do it for the lifestyle. In Spore, some do it so that they can have the addresses in the identity cards to qualify for reputable schools nearby. Just like why some people don Ralph Lauren wear, some love their IPhone 6, some their Rolex watch, and some sell their condo and rent to drive their dream branded-car. There is no ‘total loss’ but what you desire in life?

    • Thank you Frederick for another perspective. Agree with your opinion that everyone would have their personal preferences. As for renting one year to understand the locality, that’s a valid assessment too. I just spoke to a close friend about this yesterday. As for Singapore, no comments. I think the most important is that people do realise that their decisions would affect their lives. My personal opinions have been stated. I am publishing your opinion too now. Cheers!

  2. I love to live in different areas because I get easily bored and I also hate to be tied down to a certain location, Imagine suddenly getting a job in another state or maybe another faraway city? So renting seems great for me. But when I think of the money I’d be spending it does make me think twice though because rental isn’t cheap anymore … Still, what I’d do is buy a property for investment, rent it out, and maybe rent one near work or in an area I like.

    • In Australia, the people transmigrate between states to find jobs. Having find a job, they rent a place nearby. Such has been their culture until recently, the younger ones seem to purchase their homes. Yes, the banks there are showing figures to encourage mortgages that the monthly rent can be used to pay for mortgages.
      Malaysia is not small either. If one is from rural areas, coming to big cities to work would probably mean renting a home. A purchased home cannot be easily sold off to switch different locations to suit the jobs.

      • Yeah, I read somewhere the Gen-Y in Australia is very property savvy. That’s good for them. yes, urbanisation in Malaysia meant renting a room first,followed by a unit later. The question is whether they saved enough to actually purchase a unit and renting out a room instead. It helps tremendously. As for selling, I would prefer they own it for a while. Prices will be up due to inflation and wage increases, even if slowly.

    • Hi Elizabeth, just to add, within my 18 years of working life, I have moved 8 times. Haha… First few were all rentals. Next were upgrades and moving city.

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