What is a Rentvesting?
Rentvesting is a strategy where you rent a home to live in while buying an investment property elsewhere.
For some first home buyers, it can provide a way to enter the property market while continuing to live in a location they enjoy.
With Melbourne property prices making it difficult for many buyers to purchase their ideal home, rentvesting offers an alternative. Instead of buying where you want to live, you rent your preferred home and purchase an investment property in a more affordable suburb.
For example, you might rent a four-bedroom home in your preferred area while buying an investment property in a more affordable location.
The investment property can generate rental income and may provide potential long-term capital growth. This allows you to enjoy your preferred lifestyle while starting to build a property portfolio.
Rentvesting is not right for everyone, so it is important to consider your finances, lifestyle and long-term property goals before deciding if it is right for you.
What Are the Benefits of Rentvesting?
- Enter the property market sooner. You may be able to buy an investment property sooner, rather than waiting to afford your dream home.
- Live the lifestyle you want. Rent in your preferred suburb while investing in a more affordable area.
- Build your property portfolio. An investment property can help you build long-term wealth through rental income and potential capital growth.
- Work towards your dream home. Your investment property can form part of your longer-term property strategy.
- Enjoy greater flexibility. Renting allows you to change homes as your lifestyle or circumstances change.
- Choose where you invest. You can live where you want and invest where the property fundamentals make sense.
- Potential tax benefits. Investment property expenses may have tax implications. Speak to your accountant about your individual circumstances.
Is Rentvesting Right for You?
Before choosing to rent and invest, make sure you can afford both the rent and investment property costs.
An investment property may be cheaper than your dream home, but that does not automatically make it affordable. Consider your budget, goals and long-term plans before making a decision.