There’s a growing trend that is making waves lately called “rentvesting.” It’s essentially a mashup of renting and investing in real estate (obviously!)
So, what’s the deal with rentvesting? Well, it’s a strategy where you rent a place to live that suits your lifestyle while also owning an investment property in a more budget-friendly area. You rent out that second property, and voila, you’re a “rentvestor.”
This trend has been catching on, especially in Australia, where house prices are going through the roof and the cost of living continues to rise for all Australians. But, like any trend, it’s got its pros and cons. Before you jump on the rentvesting bandwagon and attempt to climb the property ladder, let’s break it down and see if it’s up your alley.
What Is Rentvesting?
Rentvesting is like hitting two birds with one stone – renting a place in your dream location while owning an investment property elsewhere. You rent out that second property while, and boom, you’re a “rentvestor.” It’s all about building wealth, creating a property portfolio, and making the property market work for you.
Benefits Of Rentvesting
Now, let’s talk perks. As a rentvestor, you can earn some extra cash flow with rental income from your investment property. This extra cash can cover your mortgage repayments and even your rent. Plus, if the property market does its thing, you might score some capital gains and tax benefits down the road. This includes tax deductions for things like advertising, insurance, and depreciation.
Being a renter also means less stress about maintenance costs, with that headache landing on the property manager’s plate. You’re also not tied down to one spot; you can own property in Brisbane, rent in Sydney, or whatever you prefer.
Cons To Keep In Mind
Where there are pros, there are cons. Living in a rental property can be a bit shaky, and you might face some cons of rentvesting. Rising rent, potential inspections, and the constant uncertainty of your living situation, it’s part of the game.
Owning an investment property means dealing with maintenance costs and maybe forking out some property management fees. And don’t forget the capital gains tax if you decide to sell. You would also kiss the First Home Owners Grant goodbye if you’re not planning to live on your property for the first year, which can usually alleviate the home loan a bit for an initial purchase.
Tips And Tricks For Successful Rentvesting
Before you dive into the rentvesting strategy, arm yourself with professional advice. Talk to a mortgage broker, consider the interest rates, and explore the property market in capital cities like Sydney, Melbourne, and Brisbane. Keep an eye on property prices, rental yields, and vacancy rates.
If you’re eyeing off that dream home in your desired location, rentvesting might just be the ticket. But remember, it’s all about balancing your financial situation, understanding your mortgage, and maybe exploring negative gearing for some tax perks.
So, whether you’re eyeing the CBD or a cosy suburb, rentvesting in Australia could be your key to building wealth in the real estate game. Just weigh the pros and cons, consider property types, and maybe consult a buyer’s agent for some insider tips.
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