Rentvesting is becoming increasingly more popular in every part of Australia. Essentially, this concept sees you becoming both a landlord and a renter. Pick your favourite location, virtually regardless of its price, to rent out and at the same time, buy a cheaper property, more suited to your budget, as an investment.
In this way, you can enjoy living in a great house in a lovely suburb – despite paying someone else to live there. You’ll have also grabbed a foothold into the property market, much earlier than you ever thought possible, through your second investment. It’s the best of both worlds – just ensure you know what’s what beforehand.
Rentvesting gives you a larger scope of the market to consider than average. That house you decide to rent is your ideal home and you can enjoy this dream without stressing about a big mortgage commitment. While you’re sitting back enjoying your perfect lifestyle, your equally new investment property is quietly chugging along, giving you an easy rental income every week and bit by bit, generating wealth and equity. Your investment may also give you a tax-deductible interest payment along with a bunch of other claimable expenses such as repairs, deprecation, fees, water rates, pest control, insurances and more.
….And bad things
While your investment might be doing great things, remember that as a tenant, your ultimate home is still not your own. You can’t make big changes to it without landlord permission and that same landlord may choose not to give you another renewal of your lease. You’re also still paying rental cash for it.
While you’ll always want top-notch, reliable tenants in your investment property, it should ideally be a low maintenance space, which you can “set and forget” with a reliable manager. This house should be rising in value over time in an area that will enjoy solid capital growth potential. Ensure it’s bringing in strong rental income, remembering that you may still need more cash to cover other outgoings – plus you’ve still got your own rent to pay.
The big question
Whether rentvesting suits you depends on your budget, lifestyle, long term goals and similar. Explore, examine, do plenty of research and ask plenty of questions to ensure this possibility will benefit you. You may find it’s easier to simply buy a property and live there as an owner-occupier. But aim for a situation and a home that will tick all your financial boxes, both now and in the future. Good luck!
Whatever your property plans may be, get in touch with your local Greg Hocking office to chat about how we can make your property aspirations a reality.