What is rentvesting?
What is rentvesting? A home owning strategy where someone rents in an area they want to live and purchases an investment property in a different location.
Rentvesting is a property investment strategy that allows you to rent the property you wish to live in whilst investing in other suburb. Instead of buying a home to live in, you’re rent a property that suits your lifestyle and budget. One of the main benefits of rentvesting is the flexibility. It allows you to choose where you want to live based on your requirements and lifestyle, while also enabling you to invest in properties that offer higher rental yields or capital growth prospects.
Rentvesting is particularly popular among young professionals and first-time investors who may not have the budget to enter the property market as owner occupiers. It provides an alternative path to building wealth through property, allowing individuals to take advantage of the benefits of property investment whilst still living in the suburb that they want to.
Benefits of rentvesting
Flexibility
Rentvesting allows you to live in a location that suits your lifestyle and preferences, without being tied down to a property. You can choose to rent a property in a desirable area, close to work or amenities, while still having the freedom to invest in properties that may offer better returns.
Access to the property market
Rentvesting provides a way to enter the property market sooner, even if you cannot afford to buy a home to live in. By using your savings or equity, investing in properties that have the potential for capital growth or generate rental income. This allows you to start building wealth through property investment without the need for a large deposit or meeting strict lending criteria.
Diversification
Rentvesting allows you to diversify your investment portfolio by spreading your investments across different properties and locations. This can help reduce risk and increase the potential for higher returns. By investing in different types of properties, such as high rental yields or capital growth potential. Helping you to create a balanced portfolio that aligns with your investment goals.
Rentvesting offers a range of benefits that can make it an appealing strategy for those looking to build wealth through property investment. However, it’s important to consider the potential risks and challenges associated with this approach before investing.
How to get started with rentvesting
Speak with your finance broker
Consult with your finance broker or bank. They will take a look at your financial situation and assess your borrowing capacity. This will give you an idea of your budget, loan options and the types of properties you can consider.
Define your goals
Determine your property investment goals and objectives. What do you want to achieve through rentvesting? Are you looking for long-term capital growth, a good yield, or a combination of both? Clarifying your goals will help you make informed investment decisions.
Research property markets
Conduct thorough research within real estate markets and see what locations align with your investment goals. Look for areas with strong rental demand, potential for capital growth and favourable economic conditions. Consider factors such as infrastructure, development, employment opportunities and population growth.
Seek advice from a buyers agent
Engage the services of professionals such as Sydney buyers agents and financial advisors. They can provide valuable insights and guidance throughout the rentvesting process. Helping you make the right decision and maximising your investment potential.
Develop a strategy
Develop a property investment strategy that aligns with your goals and risk tolerance. Consider factors such as property type, location, rental yields and potential for capital growth. A well-defined strategy will help guide your investment decisions. If you are unsure of how to create a strategy, lack time or are unsure of investment grade locations. It’s well worth engaging a buyers agent to ensure you purchase the right property for your budget and requirements.
Risks and challenges of rentvesting
While rentvesting can be a rewarding investment strategy, it’s essential to be aware of the risks and challenges involved.
Dual financial commitments
Rentvesting requires managing two financial commitments simultaneously. Your rental payments for the property you live in and the mortgage repayments or expenses associated with your investment property. It’s crucial to ensure that you can comfortably afford both commitments to avoid financial strain.
Market volatility
Property markets can be subject to fluctuations and there is always the risk of property values declining. It’s important to conduct thorough research and due diligence before investing in any property to minimise the potential impact of market volatility.
Limited control
When you rent where you live, you don’t have control over certain aspects of the property, such as renovations or modifications. This can limit your ability to personalise your living space according to your preferences.
If you are wanting to chat with an experienced Sydney buyers agent regarding your investment requirements. Book a free discovery call with Luke Bindley today.
