Rentvesting: The new property trend for investors
Rentvesting has become a popular trend as more and more people look to build wealth through property. With Australian housing prices on the rise and seemingly out of reach for the average income, this trend has opened the door for many new investors to enter the market. The idea behind rentvesting is that people continue to rent a property that suits their lifestyle; close to work, schools, restaurants, transport and so on, all while owning an investment property. The investment property increases value in the background as a neutralised asset, while you continue living the life you desire.
Rent where you love
Rentvesting presents the perfect opportunity for people who cannot afford to buy where they live. If you’re a renter, the major advantage you have is the ability to live where you want to live. Not only is renting a more flexible option, it’s also not as permanent a decision, which means you can suss out a location to see if it suits you and your lifestyle. With rental markets softening, tenants are now able to get more bang for their buck – which means you can afford to upgrade your living situation whether it be amenities, aesthetics or location.
Save what you can
With less responsibility, comes fewer expenses. As a tenant you are not required to pay land tax, strata fees, management fees or water rates. Sure, if you’re an investor you will, but this is all tax deductible. Being a renter also allows you to adjust your budget depending on your financial situation. If you want to save for a holiday you can simply downgrade your living arrangements, or if you get a new job, you can pack up and move closer to work. You’ll also avoid losing cash when buying and selling property through legal fees, selling costs and stamp duty.
Use your head
Invest with your head, so you can live with your heart. An investment should never be an emotional decision, but rather a logical financial decision that will maximise your wealth over time. It’s important that you seek professional advice to understand your long term objectives, and set a strategy in place from the forefront. In order for rentvesting to be effective, you must analyse the environment you’re in and determine how you can maximise your rental returns and capital growth.
To understand more about rentvesting, or to discuss what investment options are available to you, contact CPS Property today.
