Renting in a bustling inner-suburb may give you the lifestyle that you are after and have always dreamed of, however, it may not be so friendly for your wallet. This is where the term ‘rentvesting’ comes into play.
Usually, it is more affordable to rent a home in a popular location than it is to buy – this basic fundamental is how the rentvesting revolution started. Rentvesting is the name given to a version of property ownership in which you buy an investment property in an affordable area while continuing to rent in an area you want to live in. Rentvesting allows an individual to get their foot into the property market and maintain a lifestyle that is more practical for them.
However, just like any other investment opportunity, there can be many drawbacks and problems with rentvesting. Check out our handy tips below before you make an important decision about whether rentvesting is right for you or not…
What Are The Main Benefits?
– As mentioned before, rentvesting allows you to get into the property market sooner. This way, you can start generating capital gains, build your wealth or even help you start saving up for your dream home and also build up your property portfolio.
– Rentvesting gives you the freedom to move as you wish. You have the flexibility to upsize or downsize as your situation or financial commitments change.
– You can choose an investment property that falls under your own budget and it does not have to be in the same neighbourhood as you.
– The tax deductions from your investment can help to offset mortgage repayments. These may include but are not limited to: improvements and repairs you make along the way, property manager’s fee, interest payments, depreciation and other related insurances. These will help you cover the costs of managing your asset.
What Are The Drawbacks?
– You’re still renting, which means you will be spending, as they say, ‘dead money’ on rent, dealing with landlords and leases. Dealing with a tricky landlord can make this process even more stressful and a hassle because some issues may take longer to get sorted.
– As a tenant, you cannot personalise the home and make it your own, which can be a disadvantage if you have committed to a longer-term lease.
– You may not be eligible for some of the First Home Buyer incentives because you aren’t actually living in the property
How Do I Decide If It’s Right For Me?
– Whether you choose rentvesting or any other property-related strategy, it should come down to this question – “Does this support my long-term goals?”. It is extremely important to have a plan for your investment goals and make decisions based on how it will affect you in the longer term.
– Remember that renting in a trendy suburb comes at a cost. Which is why it is important to do the math and keep track of all your ongoing costs. Be sure that you have budgeted for both rent and mortgage.
– It is important to consider your own financial situation before making this decision. Don’t take out a mortgage just out of desperation!
– Thorough research is the key to successfully deciding whether or not rentvesting is right for you. Research about locations that provide capital growth potential, and then choose one that will suit your long-term goals.
Need help getting started? iBuyNew will point you in the right direction! Whether you are looking for apartments, townhouses or house and land packages, working closely with an iBuyNew property consultant, who understands the market, will help you find something suitable that’s tailored to your needs and requirements. Get in touch with them on 1300 123 463.