I am regularly asked if it's better to rent a property to live in and turn your home into an investment property, or just live in your home.

This question is easier asked than answered for many reasons, however, one of the biggest reasons people choose to move out of their home and rent it, is because they think they will be financially better off.

If this is the only reason then the answer is fairly easy because you can simply run some basic numbers and see which one turns out the best.

Of course you must be careful when comparing apples with apples. If I were to run the comparison for my home at the Mount, I need to make sure I am comparing similar properties.
For example, take two properties on the same site, both three bedrooms and both renting for exactly the same amount of money.
In this kind of scenario it's easy to figure out that you would be better off financially to rent because of the ability to claim deductions against your investment property that you cannot make if you own the residence you live in.

Where it gets tricky though, is that people often do what I have just spent three weekends doing for a client, and that is looking for a property that is of higher ‘lifestyle' value than the home they live in. For example they will rent out their three bedroom home and look for a four bedroom home to rent for themselves and wonder why their cost of living has increased.

In an example for this particular client, however, we have worked out that they can rent out their existing three bedroom home and based on the depreciation and various tax benefits, can rent a four bedroom property to live in. This is great for them because they get to stay in the property market in terms of ownership and therefore benefit from that but also move on to a larger more spacious home that will meet their current requirements.

One thing that is very apparent at the moment, based upon the cost of renting property in the Mount Maunganui and Papamoa areas, is that you can certainly rent property for a lot less than what it would cost you to own. This is also a question often asked and even recently you have seen main stream commentators indicate that the cost of ownership is now cheaper than renting. This however is not the case based upon what I saw over the last few weeks as I searched for rentals for this above client.