(March 2024 Blog) Is Rentvesting Right For You?
Higher interest rates and climbing property prices might have you questioning whether you will ever be able to get on the property ladder.
But, there may be a solution: taking advantage of more affordable locations. In the latest first home buyer report, Domain revealed that the amount of time it takes to save for a deposit on a home “usually increases the greater the distance from the city”.
But what if you want to live in the city?
Well, the answer then might be rentvesting, a strategic way to enter the property market.
What is rentvesting?
Rentvesting, in short, means buying where you can afford but renting where you want to live.
A buyer will purchase an investment property in an affordable location but rent a home for themselves where they want to live.
This can mean you don’t have to compromise on what you are looking for, whether that be a shorter commute to your office, access to the social events offered in the city or proximity to public transport.
Advantages of rentvesting
1. Lower entry point: Compared to the prices of homes closer to your desired location, a lower purchase price for an investment property can make it an easier first step onto the property ladder.
2. Potential for capital growth: Your investment property can appreciate over time, depending on the location you buy in and the type of property you buy. Plus, the rental income you receive can contribute towards your mortgage payments and living expenses.
3. Lifestyle: You may be looking for a certain way of life but can’t afford to buy in a corresponding area. Rentvesting allows you to own property while achieving the lifestyle you desire.
Disadvantages
1. Costs: With the addition of a mortgage, you may see your monthly costs increase. You should also be aware of added costs such as strata fees, depending on the type of property you buy.
2. Less control: Unlike owning the home you live in, when you rent you have less control over the property. You are bound by your landlord’s rules which can limit any changes you’d like to make to personalise the home or what pets you are allowed.
3. Uncertainty: Being a tenant can be unpredictable as your landlord may decide to sell the property, increase your rent, move in themselves or simply not renew your lease. This could impact your decision.
Choosing if rentvesting will work for you
If you are considering rentvesting as a means of entering the property ladder, carefully consider your financial situation and long-term goals.
It’s also crucial to buy the right investment property in the right location.
This is where a buyer’s agent can be an invaluable help.
That’s because they bring a deep understanding of the local market, helping you identify properties that meet your criteria and budget.
With their extensive network, they can access off-market properties, offering you more options. Their expertise also extends to negotiating the purchase price, potentially saving you money.
By guiding you through the buying process, a buyer's agent ensures you make an informed decision, finding the right property in the right location with less stress and effort on your part.
Looking to buy a quality investment property? As an expert buyer’s agent, A Game Property Advisory can help you secure a quality property at a good price. Get in touch with Jim by calling 0422 446 170 or emailing jim@agameadvisory.com.au.