Rentvesting : Enter the property market without sacrificing your current lifestyle

As property prices continue to rise, purchasing in a sought-after area is out of reach for the average working millennial. Instead, many are opting to rent as it means not having to compromise their inner city or beachside lifestyle. However, for those still eager to enter the market, there is a way to get the best of both worlds. Rentvesting is the term used when you purchase a property for investment purposes in an affordable location and continue to live and rent in the area of your choice. Rentvesting is a wealth creation strategy that is popular among the younger generation due to the flexibility it offers in comparison to being an owner-occupier.

Millennials no longer have interest in purchasing a property in the outer suburbs and then having to commute into the CBD. Rentvesting allows your rental income to cover the mortgage expenses so you can keep living the lifestyle you want without it costing you any money.

For this strategy to work, you’ve got to be a good saver and there needs to be a focus on delayed gratification. It’s all about living within your means. Don’t spend big at the start while you’re building it up. Step away from the mentality of negative gearing and tax minimisation. Buy neutrally, or ideally, a positively geared property as this provides higher rental yields. Use our loan repayments calculator and see what the repayments will be when financing your rentvestment property.

Market Intelligence

A recent industry survey highlights an increase in rentvesting from 21% of investors to 37% over the past twelve months. But while this strategy may appear ideal to many, it won’t suit everybody.

It’s still a foreign way of thinking. In the past, the great Australian dream was to buy a home on a quarter acre block then do everything possible to pay it off as fast as possible in the hope of living debt-free. Rentvesting is quite the opposite. It says we’re okay with good debt as long as we stick to our budget and keep using the money to invest further. You’ve got to have an open mind and be comfortable with debt.

Ensure you have the means to make rentvesting work for you! Contact You’re Welcome Finance for advice on good debt and other strategies that will allow you to maintain your current lifestyle.