Depends on your situation - but in mine - both!

I own a house in Melbourne, and have rented it out. Live (rent a property) in a completely different part of the city.

There are several benefits to this:

1/ Financially better off: By using negative gearing (using a loss on a investment property to offset/reduce the amount of tax I pay), I get a hefty tax return - and am actually turn out to be better off.

2/ Location: Regardless of where my house is (the one I own), I have the flexibility of living anywhere. This rocks.

3/ Rent: The rent I get for my property covers the rent I am paying out (roughly). We (my partner & I) also have a couple of rooms rented out, we actually end up better off money wise.

The main disadvantage, is that we can't treat our rental place as our home - i.e knock down walls, and make other modifications to it. But as long as you get a nice place, this isn't an issue.

I hate the thought of having a 500k+ debt in my name.

When I buy a house I plan to buy the whole thing out-right.

Property prices and interest rates are insane over here in Australia, at least everywhere around me is, I live on the Sunshine Coast, QLD.

Wow, property prices are insane for you guys. I'm glad that I live in the good ol rural USA (Ohio).

I just bought my first property designed to rent out. It was $45,000 USD inside of a city of 13,000 people. It's 1400 square feet. It wasn't in perfect condition, but after everything was fixed, I've put about $3,000 into the house (plus a $3,300 down payment).

In my area, this house *should* rent out for around $650-$725/mo USD depending on conditions. I am preparing to buy quite a few more properties like this. There is a quad-plex (4 single family dwellings) in my area for $129,000 that I will buy once I get a re-finance on my house, which will rent out for around $550 per dwelling.

BTW, I'm 21, and the reason I can do this is that I live with my parents. My girlfriend and I make near minimum wage ($8.00/hr for me, and $7.93/hr for my girlfriend. I work 60hrs/wk, she works 25hrs/wk).

Ultimately, the issue with renting vs. buying is if you have a huge lot of money. My parents just bought the house we live in. Unfortunately, it's very very difficult maintaining the house, as they have to pay for a $1300 USD mortgage payment (including PMI and various taxes), plus utilities, plus everything else. They can barely afford it. There are MANY bankruptcies in the US, and Ohio due to people spending 50% or 60% of their entire paycheck on a house that's too big (American materialism at its best).

Realilistically, the best thing that you can do is buy a property and re-hab it if you can find cheap labor. On my house that my g/f and I bought, we're paying $400/mo plus the $6,500 it cost to buy + fix it up. That's very cheap for the great quality of the house. However, not everyone can do that. My brother is a real estate agent that takes care of many of the details of the house, and we pay him a % of the income from the house.

IMO, renting is far better than buying, as you KNOW what the house is going to cost you, if your at a mid or low-level income. If you are assured a big paycheck, buying a house is better if you can live within your means, and put a nice down payment on your property. Atleast that's the way it works in the United States at the moment.

depends if you can afford to pay property taxes + interest + principle. if you pay interest only mortgage (thats' equivalent to rent), and price of the house does not appreciate, basically you are paying extra for property taxes.

Buy. Rent = waste.

If you buy, the Equity of your home is built up over time, which is a big difference with renting.

One of the risks involved with buying that the potential buyer needs to understand is that missed payments can lead to a foreclosure, where the courts will transfer ownership to whoever you purchased the property from or to the bank.

Yes, you can use the house as a rental property and earn income while you live in and are buying a second property, but keep in mind that this is riskier than owning one property.

Lastly, I agree with the poster that mentioned that the rent vs buy decision depends on what your long-term plans are. If you plan on moving from the area in the next 5 years or so, it probably won't make a lot of sense to purchase a home while you are still in the area.