Ahh, the Australian dream of owning your own property. I’ve owned two houses over the years and I have to say, it’s overrated, not to mention hella expensive (there is more than just the mortgage payment you have to worry about, believe me). So now I choose to rent. It is much less stress and hassle and far less expensive.

The reason that renting might be a smarter money move than buying is that you free up your money for other investments. Those investments can help to build your wealth faster than owning a home would. 

I get it. We’re told that buying a house is a good financial move. It’s a marker that we’ve made it financially. Which is understandable because houses are expensive. Particular here in good ol’ Australia. Don’t think you’re getting anything in Sydney under $1 million. Ha!

If we can afford to buy a house, then obviously we’re doing something right, right?

Well. Not quite. Really we’re just following the same path that everyone else has followed without giving it much thought whether it is the best financial move. We are constantly told by the banks and real estate industry to borrow and buy our dream house.

The dream of homeownership is a big con sell.

Myths of Buying vs Renting

The arguments in favour of buying over renting that we’re constantly told:

• Once you pay off your home it’s yours outright. No more housing expenses ever again. Oh, except insurance, rates, council fees, maintenance, upgrades, renovations etc. There is a reason that some pensioners who own their homes still struggle to pay their bills every month. Just owning a home outright doesn’t mean the other expenses stop. You need cash flow.

• The housing market always appreciates so you’ll always earn a return. Er, no. It can. But it doesn’t always. Like right now in Sydney and Melbourne, for example. (The stock market generally outperforms the property market anyway in most years historically).

• Buying a home is an investment. No, it’s not. Investments earn you money. You don’t make money from your house unless you rent it out or sell it. It’s not an investment if you live in it.

• It’s yours to do whatever you like to it. Well, technically it’s the banks for the first 30 or so years while you still have a mortgage. Don’t believe me? Try defaulting on your loan and see if they don’t sell it for you to recoup their costs without you having any say otherwise – it’s in the loan contract you signed.

• It’s security having somewhere to live. Security that is contingent on paying your mortgage on time. Of course the same could be said for renting, you’ll get kicked out if you don’t pay your rent as well. But you probably won’t have lost as much money in that case.

The arguments we’re told that say renting is bad:

• Renting is dead money. So is bank interest. You’ll pay approximately double the amount you borrowed just in bank interest over the full loan. Very little of that money goes to pay down the principle in the first ten years.

• You’ll never get rich renting. You don’t get rich from buying a house either. You get rich from living below your means and having smart investments. Getting rich has very little correlation with buying or renting a house.

• You can’t do anything to the property to improve it. True. Thankfully. That’s the landlord’s job. Need a new dishwasher because the current one breaks? It’s their expense, not mine. Ceiling needs re-painting. Not my expense. I’ll sit back and watch the painters instead. Of course, you might get a landlord that does very little to improve the property. That can happen. When you rent, you can move if it’s that bad (once your lease is up), which isn’t as easy to do if you own. Anyway, improving and renovating your own house is also overrated. Painting a room a particular colour is only fun for the first wall, then it’s work.

• Landlords can kick you out at any time. Again true. But rare. Unless you’re a sucky tenant who messes the place up and doesn’t pay the bills on time. Don’t be that person. Have pride in where you live and most landlords will be more than happy to have you stay. A good tenant is a good investment for them. That’s the whole reason they have the property—to earn money from it from good tenants.

I have neglected to mention the few reasons that I will concede buying IS a better option:

• For many people, living in their own home gives them a sense of pride and accomplishment. Feeling good about your choices in life is a legitimate reason.
• Or it’s a family home and there’s history and sentiment involved. Another good reason.
• You live in an area with very few good rental properties but an abundance of homes for sale that are relatively affordable. It mostly happens in country and rural areas. This isn’t usually the case for capital cities though.

You’ll notice that only the last of those reasons were financial, mostly because I don’t believe that buying is always the better financial option in most cases. However, I have only lived in capital cities where there is always somewhere to rent and property to buy is expensive. That isn’t the case in every area, so you will need to factor that in.

Also, I’m talking about Australia. I know in other parts of the world, this isn’t always the case depending on the area. Houses in some parts of the world are super affordable compared to here.

As for the other two, I don’t have a sentimental family home, nor did I ever get pride from owning. Home-ownership was an annoyance for than anything. So for me, renting wins.

Reasons Why Renting Isn’t A Rip-Off

Renting is a fixed cost.

Unlike a mortgage where you also have to pay for insurance, council rates and fees, water, repairs, and renovations, there is only one payment if you rent. All that other stuff is paid for by the landlord.

That frees up a lot of cash for other things.

If you’re smart, you’ll use that money to invest in something that will earn you money. For me, that’s the stock market, but for you, it might be an investment property or a business or something else that has the potential to grow those greens.

In fact, if you’ve been investing for long enough, you could get to a point where your investment now covers the costs of your rent and other bills. (By the way, if you chose the stock market like I did, it takes approximately seventeen years to get to this point – just saying).

Think about that. In less time than the average mortgage period, you won’t have to worry about coming up with your rent payment anymore because you’ll have enough income from your investments to cover it. If you’ve invested well that is. You could rent for the rest of your life and never have to worry about the money side of it.

I know what you’re thinking. You’re thinking that if there was enough money in your investments to cover your rent, wouldn’t it be better to buy a house with that money instead? With cash!

You could. I wouldn’t.

In fact, if I found one million dollars lying around somewhere (yeah right), but if I did, I still wouldn’t buy a house. I’d add to my stock portfolio and give myself an income boost. Maybe rent somewhere nicer. Or pay to get the lawns mowed every fortnight. And have more Ubereats deliveries (I hate cooking). And go on more holidays. That sounds marvellous.

I’ve been house rich and cash poor before. It wasn’t fun to struggle with the bills each month. Personally, I prefer cash flow over owning a house.

Of course, there are other benefits too.

Flexible

If I want, it’s easy to move to a new place. If the property I’m in now wasn’t suitable anymore I could choose another one. The only moving costs I would have would be the usual ones associated with transportation of my stuff. I wouldn’t have to worry about putting a house on the market and having to wait for it to sell before I could move on. Not to mention the expense of paid advertising, marketing fees, and estate agent commissions to sell your house.

Less Overall Stress

I actually find renting far less stressful overall than I did when I owned. I’m not sure why that is. Perhaps it has something to do with not having to worry about all the extra stuff that I used to do. In my own place, I was always thinking about how to improve the property or whether the old pipes needed replacing or feeling overwhelmed by the number of things you have to do when you’re a homeowner.

It’s much simpler now. Just one less thing I need to worry about.

So yeah, there it is. Renting isn’t so bad in fact it can sometimes be pretty damn good. So good, in fact, that I’m not sure I’ll ever buy again. And that suits me just fine.