Increasing numbers of first-home buyers are turning the game upside down. They are replacing the old ‘great Australian dream’ of living in their own home with a huge paradigm shift. Here is what you need to know about ‘rentvesting’.
What is rentvesting?
Simply, rentvesting is renting in an area that suits your lifestyle and budget, whilst buying in an affordable area with good yield and lots of growth potential. This can mean living in an ‘expensive’ inner CBD suburb and buying further from town or interstate. This strategy means you’re in the market and not missing out on building a property portfolio.
The reality of rentvesting
The main benefit of rentvesting is being able to live in your desired area whilst still being able to get into the ever growing Australian property market. There are significant tax benefits including negative gearing and depreciation. As well as tax deductions such as interest repayments, maintenance costs, insurances (and others depending our your circumstances). There is also the benefit of being able to use the rent towards paying your mortgage. Ideally you will buy in an area with strong long-term growth so your property grows in value allowing you to invest further.
What about the ‘great Australian dream?’
Like many Australians, we were brought up with the notion that owning your own home was the sensible thing to do – no ifs or buts about it. Work until retirement and own your own home. The media constantly promotes the ‘great Australian dream’ and puts fear into not being in the property market. There is a certain level of stigma attached to renting – ‘renting is for the poor’, ‘rent money is dead money’ and on and on.
Here’s a couple client stories:
Bree & Eric
Of course, I always wanted to buy and live in my own house but the dream was proving difficult. When we heard about ‘rentvesting’ and actually realized it was a viable option (before it was actually called ‘rentvesting’) we knew it suited our situation and our 10 year plan. We were eager to enter the property market and to be honest a little scared of being left behind. We have now had our investment property for 5 years and currently working hard to add to our portfolio. Rentvesting allowed us both to have a year off when we had our daughter and we have just returned from living overseas.
Bec & Matt
I knew I wanted to buy a property and I knew it was going to be a great way to get started financially, a great nest egg. The thing is I also love living close to the city but the prices were way above my budget. That’s when I heard about the idea of ‘rentvesting’. Renting my lifestyle in a great suburb and also having an affordable investment property that wasn’t going to blow my budget. I’m so glad I was able to get into the market when I did, at just 25. My cousin and I are joint investors in a 4 bedroom home in Bacchus Marsh and we are lucky to have some great long-term tenants. This has been such stress-free way of getting into the property market, especially when we were so young.
- More affordable to get your foot into the property market
- Live where you love to be
- Flexibility to live overseas and travel
- Tenants are paying your mortgage
- Tax benefits such as negative gearing and depreciation
- Property related expenses are tax deductible
- Multiple streams of income from investments which enables you to reinvest
As always we are here to help and would be happy to spend time with you to help you achieve your lifestyle and finance goals. If you have any questions about ‘rentvesting’ or anything else please get in touch with me. You can call me on 0409 02 99 22 or send me an email (firstname.lastname@example.org).
Owner and Founder
0409 02 99 22