Rentvesting your way to wealth

Rentvesting your way to wealth

In recent years, Australian property values have surged ahead in our major capitals and regional cities, regardless of what state you live in.  If you haven’t already placed one foot firmly on the property ladder, being able to afford your own home can feel like an impossible dream.

Unless, of course, you have a very clear strategy on ‘how’ to achieve it, or willing to adopt a strategy as a new years resolution! 

More and more first-time buyers choose to enter the property market by adopting a ‘rentvesting’ strategy. This approach to wealth creation sees investors renting in a suburb they prefer to live in or in the case of many millennials, living with their parents while they save a deposit for an investment property in a more affordable area. This may mean investing in another State that provides affordability.

I’ve heard the buzzword, but what Is Rentvesting?

Simply, you rent where you want to live and build up a portfolio of investment properties around the country that:

• Gets you into the property market
• Consistently builds your net worth
• Provides you with an asset base and a future home deposit for your own home and at the same time is,
• Tax-deductible.

Why are people increasingly opting to Rentvest?

With the escalating prices of everyday Australian real estate properties ever increasing over the past two years, first home buyers are discovering the 'deposit' bar for that dream home is constantly ramping up.

Even if your bank agrees to lend you the amount you request, the burden of your mortgage repayments can result in real financial hardship, especially in the first few years after you draw down your loan. This financial hardship can dramatically shrink your lifestyle options.

Rentvesting gives you greater control over your cash and your investment strategy

Rather than becoming an inadvertent slave to your mortgage payments, when you Rentvest you enjoy greater control over what you buy and how you allocate your budget. This is where an agile investment strategy comes into its own.

When Rentvesting, you decide:

• How much of your pre-approval do you need to spend
• When you buy your next property, a second property and subsequent properties
• Where you buy your next property
• What cash flow you require from your investment property to ensure your finances don’t become over-stressed

In addition to paving the way for you to enjoy living in a home or in a suburb that’s outstripped your current purchasing power, there’s the potential for your investment property to increase in value over the medium to long term, delivering substantial capital gains and providing a home deposit in your preferred location in the future.

Helping You Build Your Financial Future

As a property investor, there’s a range of financial benefits you could enjoy access to that simply aren’t available to owner-occupier property buyers. Moreover, your outgoing rent may be substantially lower than you’d be committed to spending if you opted to buy a private home.

Rentvesting puts you in control, helps you grow your net worth faster and represents a savvy alternative to mitigating the risk of a large mortgage on a single property.

Today, I’m seeing a trend of not just millennials but of more women in particular adopting Rentvesting as a path to a strong financial future, spreading their financial risk over their portfolio and showing others just how to do it.

Do Your Due Diligence

You still need to research your property market when you adopt Rentvesting as your investment strategy. Crunch the numbers, visit or research your target suburbs and do your due diligence on what makes that suburb tick as a potential investment.

You need to be comfortable your investment property makes sense for you financially. There are plenty of calculators available on line or with professionals (like Mortgage Brokers and Buyers Agents) that can help you weigh the costs involved and the likely benefits when deciding between rentvesting or purchasing a property as your principal residence.

A handy tip that I’ve adopted is to choose one of the many free budget apps available and download it. Set up separate budgets for both your rental property and your investment property. That way, you’ll never miss a payment or be surprised by an unexpected fee such as loan application fees, insurance, stamp duty, mortgage repayments, and taxes.

Is it time to rentvest?

2022 provides the perfect opportunity to investigate the possibilities of Rentvesting to see if it’s right for you. It can be an attractive strategy to enjoy the lifestyle you cherish while simultaneously building an investment property portfolio. You don’t have to surrender your ultimate goal of owning your own home.

A rentvesting strategy simply allows you to break into the property market sooner, ensuring you build your future financial health.