Little did I know what the potential for this occurring may be around the
corner.
Now, let’s get back to buying your own home, even in a market that
is unpredictable - and even scary.
The fact is that housing prices go in cycles and will always eventually
rise. It’s the people who can see that time through who always make a
windfall gain.
When interest rates rise there are a large number of people who will
suffer financially, and these include the home purchaser, the people who
are renting and those who are already disadvantaged and often don’t
have any home at all. It sounds pretty obvious doesn’t it?
But there are also a great many people who will make money and
those are the people who own their own homes outright. Research
indicates that about a third of the Australian and New Zealand
population own their own homes.
They are some of the people who will benefit with a better interest
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rate on their savings, have the ability to purchase investment properties
when the market is at its lowest ebb, receive tax benefits, and can raise
rents in a competitive market. Then when the market lifts they make an
absolute killing in capital growth.
This is a simple example of how the rich get richer and the poor get
poorer. It is also probably the easiest example of how money is made on
property and why your first home is the essence to building wealth if
that’s the way you want to go.
What's So Bad About Renting?
It could mean moving house time and time again.
What does it mean for the millions upon millions of people forced to
pay someone else for the privilege of living in their property?
When you are a tenant, what does it feel like to know that at the end
of a lease you can be given as little as one month notice to move out, that
you may need to move further away, incur higher transport costs or shift
your kids out of their school, daycare and sporting clubs? To know that
you will probably be competing with hundreds of others who will also
be looking to rent in your preferred location?
How much pride do you have to swallow when you go to the next
potential landlord with pleading eyes to apply for another place to live?
And what if you’re someone who doesn’t fit into the desired mould of
what the landlord wants? What if you have one too many children, a
couple of pets, don’t work full time, at a single parent, have a disability,
are indigenous, have been recorded on TICA (Tenancy Default
Register), or are young and therefore are assumed to play loud music and
party all the time?
The barriers just get bigger and more difficult for the tenant to secure
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a place to live.
What happens then?
Often, desperation gives way to acceptance and the despondent tenant
accepts shoddy accommodation in order to get a place to stay. When this
occurs the tenant has compromised there own standards for a second-rate
dwelling and usually reluctant to report maintenance or safety issues on
the premises for fear of rocking the boat and losing the one place they
managed to get.
Of course, not all people rent because they have to, some people
have a choice and do in fact choose to rent. It can make good sense
when you’re transferring with your job and aren’t sure about when
you’re going or what suburb you want to live in. Maybe you just
don’t want the added expense of rates, insurance, garden and
building maintenance, or quite possibility the timing just isn’t right
for putting down roots in a permanent abode.
Except this isn’t about people who have the luxury of choice. This
is about people who don’t believe they have any choice at all. What
happens to their lives when they don’t have the security of tenure of
where they are living? When they are told they have to move out
when the owner wants to sell or move back in? When they never
really know how long they will have a roof over their head before
they need to get out? This is the life of a permanent tenant and one
that often perpetuates more financial problems and more instability
as time goes by.
So is this the life that most people want?
The thousands of emails I received indicate it isn’t.
If you’re having to live in a rented caravan, staying with relatives for
extended periods of time, moving to different suburbs, and from one
rental premises to the next, the life of a tenant is anything but stable or
ideal.
When I had to find accommodation for myself and my children as a
single mother, I often felt discriminated against because of my financial
circumstances and perceived situation, I.e., single, with children and
receiving welfare payments. I found myself bending the truth about my
finances, declaring I had a job of some sort, and I was willing to take
almost anything if they were wiling to take me!
Now, I’m in the reverse situation and a landlord to quite a few
tenants, and I can’t help but sympathise with the many people who come
to me in the same, if not worse, situation than I was in.
As I write, my husband and I have spent the past few weekends
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refurbishing a rental premises on the Sunshine Coast. The two-bedroom
unit has been rented for over six years and needed some TLC so my
husband and I contracted some painters, replaced the torn fly-screens,
installed new door knobs, re-laminated the worn kitchen cupboards,
gave the gardens a trim, planted some annuals, pressure-cleaned the
pavers and put in new carpet. I then placed a small advertisement in
Saturday’s local paper.
I began taking calls at 7:15 am and the phone rang hot for the next
three days. I received offers to take the unit sight unseen. People were
willing to send me money straight away and one young couple even
went as far as offering me more than the weekly rent in the ad in order to
beat the other applicants.
I wondered how bad the situation really was out there…
I recall a time in the early 1980s, when my then partner and I had
travelled and worked our way around Australia in an old HT Holden
station wagon. When we finally stopped for an extended period of time
in Adelaide, South Australia, we found out how hard it was to get a
place to rent during a time when the rental shortage was so bad that
people literally queued outside the landlord’s house, with 30 or more
people trailing behind. We were a teenage couple, didn’t have secure
employment, any furnishings whatsoever and had scraped together the
bond and first week’s rent by borrowing from our parents and getting
them to sell an old motor bike for us back in Western Australia. What
hope did we have of getting selected at a time when getting a rental
premises was like finding gold?
I remember we almost begged a landlord to be considered for an
unfurnished one-bedroom flat. At the time, we had been living in a
dilapidated tent, so decrepit that the owner of the caravan park
asked up
to leave because it was bringing down the appearance of
the park. I’m not kidding… we got evicted from a caravan park due
to the state of our tent! Mind you, it was pretty bad. The tent didn’t
have much canvas left and was mainly held together with an array of
techno-colour patches, fence wire and old rags. But it was home!
Nevertheless, we needed to find another place to live immediately
and couldn’t afford the daily cost of a hotel room. We spent weeks living
in the back of the car, moving from one parking space to the next and
showering at the beach. After madly scouring the papers daily for work
and a place to rent, we would queue with the hordes and become ever
more despondent at the knockbacks. Our situation became gradually
more depression with incessant heat, poor living arrangements and our
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own insecurities coming to the fore.
A feeling of worthlessness overtook us personally.
This is a feeling I have experienced many times in my life but when it
comes to having a place to live in it’s one I flatly refuse to experience
again.
But is this what others are experiencing now? Are there people so
desperate about their living arrangements that it is affecting their level of
confidence, which further spirals into a sea of depression and a sense of
hopelessness?
The answer is YES.
During 2007 a number of events occurred that signalled the
impact that housing availability and affordability was putting
on people, but one of the most significant events happened in
the area where I live.
My mother was conducting her usual Justice of the Peace
duties when grief-stricken couple burst into the office she was
in. The couple were quickly followed by more people in
shock, shaking and overwhelmed by what they had witnessed
in a real estate office across the road from where my mother
was working.
The circumstances weren’t very clear, but the events
described by the media suggested the issue was rent. What
that issue is I cannot make comment on, however it enraged
the gentleman, who was of non-English speaking
background, to the point of him pulling a gun an a real estate
agent and shooting her dead. She was in her twenties.
The tragedy of this event has no words.
Homelessness
While you may not be in this situation right now, homelessness is a
reality that can occur to anyone. Here’s some food for thought…
At some stage in anyone’s life the chances of experiencing at least
one if not more of the following can be a contributing factor to
becoming homeless:
1. a marriage/family breakdown
2. loss of employment
3. a mental illness (such as nervous breakdown,
schizophrenia, depression, etc)
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4. financial mismanagement
5. bankruptcy
6. substance abuse
7. domestic violence
8. repossession
9. physical and/or sexual abuse
10. a culturally or linguistically diverse background
11. intellectual disability
12. sale of a caravan park to re-develop
13. sale of a rental premises
14. re-development of land and more
These scenarios can mean being only one step away from having
nowhere to live - in effect, becoming homeless.
Aren’t all these things enough to deal with without the added stress of
not being housed?
In Australia alone almost 100,000 people in any given night are living
without a secure roof over their head.
Surely a place to stay is a basic human right and one that should not
be denied to anyone?
But as much as we try to pretend the problem really isn’t all that bad,
it is an issue that does exist and right now is increasing at an alarming
rate. Many find short-term accommodation with
families and/or friends or stay in cheap boarding
houses, only to be sent out early the next day to
wander the streets. As for the homeless services,
having worked in the industry for many years, the
availability if any is scarce, and for those who do
secure a night here or there within the services,
there are ten more left to sleep rough. This often
entails living on the streets, under bridges, or in the case of a man I
knew, between a bus shelter and hotel wall.
Contrary to popular belief, homeless people come from all age groups
and backgrounds. Families do live in the back of cars, in tents, or are
forced to ‘crash’ in the lounge room of families and friends.
The problem is out there and unfortunately it is going to get worse
and worse without some constructive intervention.
I have my own theory on this subject having lived close to the wind
and been homeless myself.
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I was involved in a violent relationship for many years and
that meant living in a dangerous environment with my child.
During that time I was always on guard and walking on
eggshells, never knowing when I might spark another volatile
attack with a word or action. I had to flee for my life on many
occasions and often slept with my daughter in the car. On a
few occasions I attempted to get into a women’s shelter, but
they were usually chock-a-block full with other women and
children experiencing domestic violence so I stopped even
trying. I couldn’t face my family with the shame I was
carrying, so going to them would have been like losing any
ounce of pride I had left. Most times I was short of money
and with no petrol, so camped in the car. I still took my
daughter to school and we washed in the toilet facilities of
supermarket complexes. The fear I felt at being so vulnerable
is the one thing that makes me feel so much empathy towards
people forced to live in similar situations.
I make mention of homelessness in an effort to illustrate how easy it
is to end up without somewhere to live, even when you think, ‘That will
never happen to me.’ A short series of events can quickly snowball and
before you know it you’re struggling for a place to live.
As a landlord I now have the unenviable task of choosing the ‘right’
tenant. What sort of power does this give me? I am the one who makes
the ultimate decision about who gets to live somewhere and who has to
keep on looking.
Of course, as an investor I want the place to be looked after, to be
paid rent on time and not to be bothered with complaints about my
tenants. So I suppose it would be reasonable for me to select a tenant
who suits my needs, not necessarily the tenant who is the most
deserving, which leaves a whole lot of people left out on a limb!
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This is the life of many, many people looking for a place to live but
it need not be you. Instead of being at the mercy of someone else, it’s
time to take action and work towards getting your own home!
Some common statements made by people who didn't
own their own home
“I’ll never get into my own home. I�
�ve so much in credit card and
personal loan debt that no one will ever give me a loan.”
“How can I afford to even think about the next rent hike?”
“I’m a single mum, who’s going to give me a loan?”
“I just can’t save enough to put away for a deposit. As soon as I get
some money together I get hit with another unexpected bill.”
“The cost of housing is so high now that I can’t even imagine how I
could pay a house off.”
These are all very valid responses in their own way. I have heard
them over and over again from people from all walks of life and my
research, who continue to come to me.
After a great deal of publicity I was approached by many people over
the course of my travel, in airports, on planes (on numerous occasions by
flight attendants), in shopping centres, at the checkout, when I was out
looking at properties for sale and even just waiting for a cab. For the
most part I was asked,
“How did you do it?”
Obviously, there is no simple answer to the question and often with
limited time (especially when you’re standing in a cab queue), I would
give the answer, “The same way anyone can do it.” This generally
sparked one of the responses above.
My answer is always the same here and as much as it is an old cliche,
I still like to use it.
If there is a will there is a way… the way part means moving out
of your comfort zone and not letting negative objections get in the
way.
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What a home Can do for you
Never in my wildest dreams would have I believed the wealth and
comfort that ONE, yes ONE, modest home could bring me. The tiny
dilapidated unit that I had bought as a home would also become a secure
haven to live in, an easy investment to manage, and a means to long-
term financial wealth.
Why did it take so long for me to see I had a golden goose in that
property, one that would keep on turning out golden eggs?
I didn’t see it because no one ever told me about it.
Sure, I knew that a house would be a good thing to own, but
the fact that it holds a more lucrative key than the one to the
front door seems to be a message that was hidden in a closet
somewhere for only a few to know about.
But not any more, folks!
Goodbye Renting Page 4