Rent? or Buy? Why not both? Rentvesting!!
"Rentvesting" is where you purchase a rental property as an investment while renting another property in which to live.
According to many experts, rentvesting is a great for first first-home buyers to enter the property market. It's a smart approach to property acquisition that's giving potential first home buyers the opportunity to buy sooner rather than later.
In capital cities in particular, house prices are growing faster than first home buyers can save a deposit. Saving $50,000 (or more!) for a deposit is a big commitment and hard work, and by the time you have $50,000 saved, house prices are likely to have jumped again meaning an even bigger deposit is required.
If you buy an investment property now in a location you can afford, and rent where you want to live, then you will be in the property market and have an asset that is growing in value, and have the mortgage mostly paid by the tenant. The equity you are gaining in the investment property can then be used to buy additional investment properties or to get you into your dream home. This works well if you purchase in high-growth areas that have high rental demand.
Many years ago, a client of ours did just this before the term "rentvesting" was even thought of. A young 20-something couple, both with well-paid jobs living in a rental property in Sydney close to their workplaces. Their parents sat them down and suggested that they put their disposable income to good use and buy a rental property with it. They did just that. Bought a property off the plan with us, and watched it grow in value. They then bought a second rental property. With the equity in both of these homes that had increased over 5 years, they were able to sell both and buy their own home in Sydney with a smaller and more manageable mortgage.
If you want to know more about how this could work for you, or even your adult children, then please reach out and have a conversation with us.
We can be contacted by phone on 4322 5600 or email at [email protected]