What is Rentvesting? 4 Major Benefits you can get from Rentvesting
Rentvesting is the practice of living in a rental property while simultaneously renting out an investment property that you own. Rentvesters typically rent the property they want to live in (but can’t afford to buy) and buy property they can afford (but don’t want to live in) and rent it out as an investment property.
For example, if your dream home is a three-bedroom home situated close to or within the city fringe, the prices are usually quite high, and you may not be able to afford it.
Why Rentvesting?
Rentvesting opens the option to explore suburbs all over Australia – you are not limited to the city in which you live. In the current market, an investment property in Sydney may feel unattainable. Exploring outside of the city limits will provide you with more scope.
The key is to look for suburbs that offer a rental yield of 5% or more to ensure your mortgage repayments are met without you having to fork out the cash. An investment property in Brisbane or other cities with pockets of suburbs that experience rapid growth could make a good choice if you prefer a city to a regional area.
Despite the fact you are still renting, this strategy helps you build equity, which can be used to purchase further investments or even secure your future dream home. Avoid some of the financial hurdles that buying in your desired location can bring – with a cheaper property you will not require as hefty a deposit, so achieving your goal of owning property is more accessible.
Rentvesting offers an alternative that uses renting as a part of a strategic investment plan to have the best of both worlds.
What are the advantages of Rentvesting?
- An easier way into the market: – The earlier you can enter the property market, the sooner you can start generating wealth through capital gains. Rentvesting provides an easy way, especially for the younger generation, to enter the market early and start building those gains. As the market rises, you will start benefiting which can be used to purchase another property. Having two properties generating wealth means you will likely have two groups of tenants paying off your mortgage.
- Flexibility: – Rentvesting allows you to be flexible. You can live where you want to live. Perhaps, now, you are unable to purchase a property in your ideal home location or Maybe you need to relocate closer to where you work or to where your family lives. In the meantime, you can live in a rental property and easily change homes if your circumstances require it. By contrast, if you are chained to a mortgage, it is not so easy to just pick up your things and move on. Rentvesting allows you to maintain your lifestyle preferences, and live where you want.
- Save money in the long term: –Many people believe that the rentvesting strategy will literally double their costs. However, depending on how the investment is structured, it is possible to save money by renting where you live and claiming investment benefits where you own. If you buy the right property, you could potentially save thousands of dollars a year.
- Tax benefits: -The costs involved when owning an investment property are tax deductible, and these are significant benefits that can be taken advantage of. This means that even if you are not generating a profit from your investment property, you can still claim to take advantage of negative gearing to create a positive result.
Rent and Invest VS Buying
People should prefer Rentvesting to Buy as by doing that you can continue to live in a good area in a more affordable way, while you buy a home further out as a point of Investment and continue to build rental income + capital growth.
Disclaimer: Articles in this blog are just the author’s or authors’ personal opinions. The author or authors cannot be held responsible/liable for any content in this blog. It may or may not be correct. Please do your due diligence and seek professional advice according to your circumstances. How to Interview on Zoom Call. Tips and tricks for interviewing on zoom
