MAINTAINING A HOME
Video: What Is Rentvesting?
22 November 2019
The pros and cons of Rentvesting
Suncorp’s Andy Wilgose explains what Rentvesting is, why it’s an increasingly popular home-owning strategy and some of its pros and cons.
Rentvesting is a popular strategy in Australia when people are purchasing a property.
Often, they’ll purchase an investment property or multiple properties in rural or regional areas where typically prices are lower than in a CBD hub like Melbourne or Sydney.
People will then look to rent a property in the CBD, so they’ve got the benefits of a city lifestyle such as transport, eating out, and great schools for kids.
One other benefit is that you can use the income from the properties that you’ve purchased to even pay for your rent.
Why is Rentvesting popular?
A lot of the price increases that we’ve seen over the last decade have been for dwellings in the likes of Brisbane, Sydney and Melbourne. It means these properties are out of reach for a lot of people or a bit too much of a stretch.
Rentvesting means people can get a foot on the property ladder and purchase a property in lower-cost areas without giving up the benefits of a city lifestyle.
And often people want to purchase a property, but they can’t pick up their lives and move out to a regional area. So, by buying in these regional, rural, and lower cost areas and renting in the city, they get the best of both worlds.
What are the benefits of Rentvesting?
Some of the benefits of Rentvesting are you get to live where you want; you’re not restricted to where you can only afford.
And obviously investing in investment properties, you may get some tax benefits.
You also get the benefits of being a tenant. Those benefits might be if your washing machine or dishwasher breaks, you’re often not up for those bills.
What are some cons of Rentvesting?
Whilst being a tenant is great and you get some benefits, there’s also downsides to that. You may need to make the property you’re renting available for things like open for inspections. You may even need to vacate the property if the landlord decides to sell, sometimes two or three times, which can be really inconvenient.
As with any investing as well, you’ve got make sure you don’t get in too far and overextend yourself.
What to consider before Rentvesting
Some of the things to consider before Rentvesting is what’s important to you. If lifestyle is important, then Rentvesting may be for you. You may want to sacrifice and move further out, that’s up to you.
Suncorp Bank can help if you’d like to purchase an investment property. You can come into one of our stores and speak to one of our awesome team, our website Suncorp.com.au, or you can call us on 13 11 55 and we’ve got lots of people who can help you find out about the investment loan options that may be available.
Rentvesting is a home-owning strategy where you rent a property to live in that’s right for your lifestyle, while you own an investment property that’s right for your budget.
As home prices in inner-city areas have gone up, this strategy is increasingly popular, especially among younger buyers. According to Domain.com.au , in 2016 approximately a third of investors were also renters.
At first, it might not seem to make sense – why pay off a mortgage and rent at the same time? Wouldn’t it be easier to just buy your home?
There’s no one right answer. It all depends on your budget, life stage and the lifestyle you want.
For example, perhaps you’re single and you want to get into the property market but the home you want isn’t in your price range. Or maybe you’ve scored a great rental property and the timing isn’t right for a move. Or you’re happy with inner-city living for now, even if you know down the track you’ll want to move to a more spacious home further out.
Rentvesting can give you the best of both worlds. You can buy a property and rent it out to cover some or all of your ownership costs, while continuing to rent the home where you live. If your investment property is earning you a profit, you could even use that income towards your home rental costs.
You might end up spending around the same if you were just renting or if you were living in a home you owned. The difference is, you can live where you want and get your foot in the property market.
Rentvesting Pros and Cons
If you’re thinking about investing in property, it makes sense to get professional financial advice. A Suncorp Financial Planner can help you live the life you want now, while planning for a more secure future. Rentvesting could be one way to make it happen.
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