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Why Renting Is the New Owning

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    Renting is the new owning, as evidenced by the fact that approximately 30% of all Australians currently reside in rentals.

    According to census data, Australia's rental population has increased from 26.9 to 30.9 percent since 1991, while homeownership has decreased from 68.6 to 65.5 percent. Additionally, about as many Australians now rent their homes as do so.

    According to Amy Sanderson, head of property investment management at LJ Hooker, there are advantages and disadvantages to renting.

    She explains that renting frequently enables people to stay in neighbourhoods they love but can't afford to buy into.

    It may enable you to live a lifestyle that would be impossible if you were paying off a mortgage.

    Additionally, Sanderson adds, "Renting allows you to live in a property without the same ongoing costs as owning - no repairs, maintenance, council taxes or levies."

    According to her, though, renting need not prevent someone from becoming a property owner.

    Rentvesting, which entails purchasing an investment property in a less expensive area and renting a residence elsewhere, provides access to the market.

    "A rented investment property can help you service a mortgage, put you on the property ladder, and enable you to claim the necessary tax deductions."

    However, there are drawbacks to renting. Without your landlord's consent, you certainly can't make alterations to the property, Sanderson explains.

    But there are other alternatives, including using stand-alone picture frames, furniture, and other unique items that don't encroach on the property, to express yourself on your home.

    According to Sanderson, long-term renting frequently suits people. But what tenants search for varies.

    "You'll be searching for different attributes in a property, whether you're just out of the house, a couple in your 30s, or a family of four," she explains.

    She continues, "What attracts to tenants can alter over time as a result of the addition of a family member, the end of a relationship, or growing out of a home."

    According to Sanderson, trustworthy tenants should be aware of their worth in the market.

    "Long-term tenants should be aware that they can be a physical asset to their landlord if they pay their rent on time and take care of the property as if it were their own.

    I know landlords who chose not to raise the rent at lease renewal time because they were satisfied with the behaviour of the tenants, the woman says.

    Additionally, imagine that a current tenant declines to pay higher rent. In that situation, Sanderson argues, the expense of re-advertising the property and the time spent looking for new tenants sometimes cancel out any increase in income.

    The magic frequently occurs in long-term tenancies with on-time rent payments and well-maintained properties when a tenant feels at home. Additionally, consideration for the neighbours is excellent for all parties.

    Renting for the first time with bad credit and what you can do

    It can be difficult to rent with friends if you have weak credit or are a first-time tenant, even if it is an exciting stage in life.

    Most landlords will run a credit check on prospective renters because they want to find the best tenant for their rental unit.

    Sadly for novices, having no credit history is frequently equated with having a poor credit history.

    This is because it might be challenging for landlords to determine whether you constitute a risk to your finances.

    You can find it difficult to find a rental if you have no credit history or a bad record against your name that causes landlords to ignore you.

    However, you can do a few things to increase your appeal, so don't panic.

    Move into a share house

    Landlords are not the kind to take a chance on a student who has just graduated from high school or college.

    Moving into a sharing house is one of the greatest methods to avoid this.

    This can help you demonstrate that you are a responsible renter who can be counted on to consistently pay rent on time, even if it is only for a little period of time. However, in order to take advantage of this arrangement, you must make sure that you are listed on the lease as a co-tenant.

    Get a roommate

    If possible, look for a place with a roommate with a good renting history.

    It will be easier for you to persuade a landlord that you are less of a liability if one of you has a good renting history.

    Even better if your roommate agrees to sign the lease for a property by themselves and add you to the lease later as a co-tenant.

    Create a financial buffer

    If you have the money, a landlord will be less worried if you offer to pay extra rent in advance.

    One month's rent in advance is frequently requested from tenants.

    Offer a lengthy safety net of six to eight weeks.

    This will help potential tenants who have a poor credit background.

    Character references 

    A positive recommendation can go a long way.

    It is best to include at least two solid letters of recommendation that attest to your reliability with your rental application.

    As a pleasant letter from your parents is unlikely to have much influence, make sure the references come from a reliable source, such as your job or a prominent community member.

    Get a guarantor 

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    Find out whether your parents or other family members are willing to co-sign your lease or guarantee all of your rent payments.

    This is typical if you are leaving the house. It permits your parents to assist you without limiting your independence.

    Additionally, this will comfort the landlord that the rent will be paid no matter what.

    You'll need your guarantor to sign a contract.

    At the end of the lease, this guarantee frequently includes a commitment to pay for any unpaid cleaning fees or damage.

    Raise the stakes

    As a last resort, if you are having trouble finding a rental, offer to pay a little bit more in rent.

    You can increase the rental charge by an additional $10 to $20 each week if it fits within your budget.

    It is a relatively little adjustment every week, but over the course of a year, it will increase rent revenue by $520 to $1040.

    For a landlord, this bonus will be a lovely offer that will be hard to refuse.

    Location

    Where you wish to reside will have a huge impact on the outcome of your search if you are renting for the first time with no credit or terrible credit.

    You will have more trouble finding a home in markets with tight rental restrictions.

    So perhaps cast a wider nett to increase your chances.

    Returning to the suburbs you had originally desired will be simpler once you establish a solid renting history.

    Clear your debts

    Whether you like it or not, it's probable that your landlord will check your credit history to make sure you'll be a trustworthy tenant.

    Prior to submitting a rental application, it is best to settle any unpaid bills.

    If you can't pay everything off, consider taking out a personal loan to combine your debts so that they appear less frightening on paper.

    The first things to be paid off should be credit cards and phone bills. However, be aware of predatory lenders who offer low-level loans to help you get back into the black. These lenders frequently charge extremely high-interest rates, and your credit will be further damaged if you default.

    Move on from your past.

    Poor credit history might occasionally be the result of circumstances beyond your control, including losing your job.

    If your circumstances have changed, presenting proof of your salary and a letter of recommendation from your work will go a long way towards demonstrating your dependability.

    If your credit status has improved, it also pays to present bank statements demonstrating your own savings.

    Seven rental application hacks that work

    However, a few insider tips could give you an advantage during the application process.

    Check out these tried-and-true tips from actual renters.

    1. Get in quick

    Before inspecting the property, have everything you need ready for your application.

    A Sydney tenant named Rebecca says, "Some inspections can be really competitive, and you're in a market with a dozen other outstanding candidates - it can come down to punctuality."

    If an agent accepts applications in person, be prepared to submit your application right away by having all the necessary paperwork on hand. If the applications are being filed online, make sure that all of your pertinent documents are saved in an accessible file on your computer and are prepared to attach or upload an email as soon as you have reviewed them.

    When I was leaving an open inspection, I noticed a couple using their laptop in their car to fill out an application. Rebecca reflects. "I wasn't able to get the house."

    2. Be organised

    What determines timeliness? Organisation.

    Simple errors like mislabelled files or omitting a crucial supporting document by accident can make or ruin an application.

    The owner might be reviewing 50 applications, so keep in mind that they won't bother you for a document that everyone else has provided.

    Especially if you're applying with numerous housemates, this stage can be quite important.

    3. Work on your presentation

    Obtain an inspection and appear like a perfect renter.

    Holly, a young renter from Hobart, says she attended an inspection where at least 20 other people, largely students, were present.

    "While the majority of them were dressed like students—a little grunge, if you will—I dressed a little more formally, as I would for a job interview. I believe the agent observed that I appeared a little more put together and possibly a little more responsible. I'm almost certain that our conversation during the inspection is what helped me land the house.

    4. Add a cover letter

    Emma, a renter in Melbourne, says she always approaches rental applications like job applications, which entails including a cover letter. This adds to the previous argument.

    If you are self-employed and have multiple sources of income, she advises, "it can be very helpful to include a cover letter describing your status and finances."

    "I have one child. I receive Centrelink funds, child support from the kids' father, and my business income. I also disclose in the letter that I own shares.

    5. Talk yourself up

    Don't be afraid to include a few extra documents with your application to demonstrate why you would make a great tenant.

    Obtain written testimonials from your workplace or prior landlords. Please include any honours or recognition you've received for your volunteer work in the neighbourhood. Do you volunteer or operate a successful blog? Noting it won't do any harm!

    6. Make a relationship with your agent

    With 15 years of rental expertise under her belt, Leigh from Sydney was able to get a few rental properties using this strategy, most notably an apartment in Coogee, which is near the ocean.

    Every high-quality home will likely receive more than six good applications in a competitive market like Sydney, claims Leigh. This means that if you want to acquire that great job, you must stand out from the competition in a way that doesn't depend solely on your application.

    "I discovered that hanging out and speaking with the agent throughout the inspection is the best approach to do this. If you can win the agents over, you'll have a better chance of getting the job. The agents will give the place to someone they like.

    7. Follow up

    Finally, if you want your application to stand out, follow up politely after you submit it.

    Ask the agent or owner how the market was, what they were looking for in a tenant, and if there is anything else you can do, but keep it polite.

    Once you've been given the go-ahead, it's time to start organising. Quickly pay your bond, plan your move, connect your utilities, and think about purchasing rental insurance to safeguard you and your possessions in your new house.

    Talk to your friends and relatives and pay attention to their opinions if you have any doubts about the guidance you receive from various sources.

    How to maximise renting before buying

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    So how can you move in as soon as possible while still making rent payments? We sought the advice of a financial advisor to learn what renters may do to improve their chances of purchasing a home.

    Your ability to borrow money could be harmed if you have high credit card obligations.

    The challenge of saving a deposit

    The main challenge for renters who wish to buy a home, says Martin Speiser of Masu Group, is putting up a deposit, especially in large cities where rents are expensive.

    According to Speiser, renters spend a significant portion of their disposable income on rent. Saving money is difficult as a result.

    It's difficult to advise a twenty-something not to go out and party or travel because lifestyle is a priority for young people.

    Speiser claims that saving a deposit is essential despite the difficulty.

    Without a deposit, you are unable to acquire because "banks no longer lend 100% of the buying price," he claims. Additionally, it is now harder for parents or other people to serve as loan guarantors.

    Renters who intend to purchase their home should prioritise saving for a deposit, but there are additional considerations.

    Look at the bigger picture.

    Speiser claims that modifications to the first-time home buyer's subsidy and the capping of stamp duty breaks in some areas are ineffective.

    This has frequently occurred while real estate prices rose at the same period.

    This means it pays to take the time to consider how the wider picture may effect your capacity to purchase real estate, either favourably or unfavourably.

    According to Speiser, as prices rise, affordability decreases and deposits become more expensive.

    Speiser claims that low mortgage rates are not helpful for first-time homebuyers and actually make saving more difficult.

    According to Speiser, "you'd assume low interest rates would encourage purchasers." However, if you're attempting to save in a bank and the interest yields are only 2%, you're not receiving any growth.

    The loan-to-value ratio (LVR), or how much a bank will loan relative to the value of a property, as well as the bank's willingness to lend in certain locations where they believe there is an oversupply, such as Docklands in Melbourne, have all changed recently.

    Speiser claims that if they do lend, it might be at a lower LVR. "And the deposit required is bigger the lower the LVR."

    Prepare yourself financially

    Speiser offers straightforward advise to individuals considering buying real estate.

    He advises "saving, saving, saving and trying not to rack up credit card and personal loan debt." "Having significant credit card debts could hurt your capacity to borrow money."

    And think logically about how you may assist yourself in achieving your objective.

    According to Speiser, "many young people also prefer to stay at home longer to save."

    Research the property market

    Speiser believes that while most people have a general idea of where they want to reside, you should always do a thorough analysis of the real estate market and be willing to consider the advantages of new places. Take into account both any drawbacks and necessities like access to public transportation, schools, shops, and other amenities.

    Additionally, visit houses that are currently for sale and verify recent sales prices using websites like realestate.com.au/invest to see what your money can purchase.

    Take a long-term view

    An alternative is to purchase an investment property if you can't afford the neighbourhood you prefer or the home that best fits your needs. Speiser claims that doing this would be a smart idea if you have a long time horizon.

    According to Speiser, investing in real estate typically takes eight to ten years. "I have seen numerous instances when renters who own investment properties are better off in the long run than home buyers who purchase a home and pay it off."

    But Speiser adds that there are numerous elements to be taken into account, including the type of property, the potential for growth, income, and the impact of negative gearing, and that there is no one-size-fits-all method for climbing the property ladder.

    Another choice is to purchase off-the-plan. Speiser claims that even while it has dangers, it can still help you continue saving for a down payment and move up the property ladder.

    Be informed about the process

    Speiser advises tenants to thoroughly examine the procedure for purchasing a home and be aware of all associated costs, such as stamp duty and legal or conveyancing fees.

    For instance, potential purchasers should be informed that banks base their lending decisions on valuation rather than the purchase price.

    Speiser explains that a larger deposit will be required if the appraisal is less than the buying price.

    Many people rent instead of buying homes because of individual circumstances and generational trends. ... Others may want the flexibility renting offers and the freedom to move on from a job or city without the burden of having to sell a home.

    Rent is surging for a number of reasons, including more certainty in the job market and young people moving out on their own as pandemic restrictions end, says Nicole Bachaud, a market analyst at Zillow. Many people left cities and others moved in with family members in 2020, but that's reversing now.

    What's keeping millennials as renters? It's not surprising that the high price of homeownership is what keeps 74% of millennials who say they'll always rent signing those rental leases.

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