Why Choose Rentvesting?

For many Australians, the dream of owning a home in their ideal location is becoming harder due to rising property prices. Rentvesting offers a solution by allowing you to:

Live where you want: Rent in a suburb that suits your lifestyle, work, or family needs.

Invest where it makes financial sense: Purchase in an area with strong capital growth or rental yield.

Build wealth while maintaining flexibility: Your investment property can generate rental income and potential capital gains while you enjoy the benefits of renting.

According to a recent article in the Australian Financial Review, the financial feasibility of rentvesting depends on factors such as interest rates, rental returns, and property prices. While the strategy has become more expensive in some areas due to rising interest rates, it remains a viable path for those who plan carefully (AFR, 2024).

Is Rentvesting Right for You?

Before jumping into rentvesting, it’s important to weigh the pros and cons.

PROS:

✔ Affordability: Buy in a more affordable location while enjoying the benefits of living elsewhere.

✔ Investment Potential: Gain exposure to the property market and build equity over time.

✔ Tax Benefits: Potential deductions on mortgage interest, maintenance, and other investment property expenses.

✔ Flexibility: Rent in different locations without being tied to a mortgage in your preferred living area.

CONS:

✖ Renting Isn’t Permanent: You may face rent increases or need to relocate if your landlord decides to sell.

✖ Costs of Owning & Renting: Managing mortgage repayments and rental costs requires careful budgeting.

✖ Capital Gains Tax (CGT): Unlike a primary residence, your investment property may be subject to CGT when you sell.

Tips for a Successful Rentvesting Strategy

If you’re considering rentvesting, keep these key tips in mind:

Choose the Right Investment Property: Look for suburbs with strong rental demand, good infrastructure, and potential for capital growth.

Budget Carefully: Factor in both your rental expenses and investment property costs, including mortgage repayments, maintenance, and insurance.

Seek Professional Advice: A financial planner or mortgage broker can help assess whether rentvesting aligns with your long-term financial goals.

Think Long-Term: Property markets fluctuate, so ensure you’re financially prepared to hold onto your investment for several years.

Final Thoughts

Rentvesting can be a smart strategy for those who want to upsize their lifestyle while still making a move in the property market. With the right planning and financial approach, it allows you to achieve both lifestyle and investment goals without compromise.

If you’re thinking about rentvesting, the Barry Plant team can help you find the perfect investment property while guiding you through the process. Get in touch with us today!