Is Rentvesting Right For You?
For many years it has been common practice for Australians to purchase a home to live in first before ever considering the purchase of an investment property. Nowadays, however, many young first home buyers have been bucking this trend by choosing to continue to live in a rental property and purchasing their first home as an investment. This practice is known as ‘Rentvesting’.
Rentvesting refers to the trend of home buyers preferring to purchase their first home as an investment, rather than to live in, whilst still living in a rental property themselves. Rentvestors, as the buyers are referred to, are typically young first home buyers who are taking advantage of Australia’s property market and keen to start building and creating their investment portfolios and their wealth.
Buyers who have not yet purchased their own home to live in have account for an estimated one third of investors indicating that many young Australians are choosing to rent with friends or stay at home with their parents a little longer in order to enter the property market.
The Rentvesting strategy provides first-time buyers with many benefits, both financial and non-financial including the following:
Buyers may receive all the tax benefits of a property investor, including Depreciation and Negative Gearing
The rent received from the investment goes towards the loan repayments and can, at times, be enough to cover the mortgage
The investor is provided an opportunity to get their foot in the door of the property market
By renting, the investor can live where they want and in their ideal location where they can afford the rent but not necessarily afford to purchase a home in that area, i.e. Close to the CBD
Renting also provides the young investor with the flexibility of extended travel or relocation
Rentvesting may not necessarily be a new concept but it is one that is gaining increased popularity as investors take advantage of the benefits of this strategy.
If you'd like to know more about Rentvesting, or other useful strategies to help get started with your property portfolio, contact us today.
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