16/02/2022
Rentvesting – You may not have heard of this terminology, but I have been banging on about it since my sons were entering the real estate market with very little capital.
This is the case for many people around the country, but there is a way to get in on the ground floor early on. Whether it be your first home, your first investment property, or you wish to expand your portfolio
you’re likely to be asset rich and cash poor.
There is a solution…..rentvesting
What is it?
Buy a home where you can afford and rent where you want to live!
How does that work? I don’t have enough money to spend on all these things!
Rentvesting takes all the good things about buying the worst house on the best street, whilst allowing you to live in the best house on the street you want!
What is the point?
The important thing is to get on the ladder and to build your portfolio – You may wish to buy something within your super fund and there is a limit to the funds you intend to make available to achieve this – it really doesn’t matter where you make the purchase as long as you consider all the options.
Should I just buy something I can afford?
In some circumstances the short answer is yes! With the housing boom erupting It may not be viable to do this where you currently live. This is when rentvesting comes into play. In addition to getting on the ladder there is a host of tax benefits to owning an investment property….you could come to love the tax man every June when you are delivered a giant refund!
*note you should always seek independent financial advice before making any decisions regarding your individual financial situation and future
So what advice would I give my sons?
My rule of thumb is “Would I live in this home /location?” If the answer is yes then it is probably desirable for a potential tenant.
If the answer is no, then why? Remember that cosmetic issues are only a matter of opinion or a lick of paint away from becoming “retro”, “groovy” or the latest Pinterest fad.
Look for schools, look for public transport and look for cafes/night life, these are your big draw cards for potential tenants.
Take away points
Rentvesting provides the opportunity to:
- Get started
- Invest to the value to which you are comfortable
- Maybe purchase more than one property and double the
benefits
- Build your portfolio earlier
- Reach your goal sooner
A Tip for today!
Treat your mortgage as forced savings -build equity and gradually increase your ownership % or sell and use the equity to buy in a more suitable location.
A prime example : A very high yielding -Low price investment. Close to the beach and all facilities.
1 property for sale in Australia. Browse the latest real estate for sale in Australia and find your dream home with realestate.com.au.
