With house prices going up, a lot of Australians find it difficult to enter the property market. One of the solutions that is quite popular is Rentvesting.
In rentvesting the first thing to understand is what is an investment property - Investment property is what you buy to rent it out with an intention of earning rental income or capital growth.
What is Rentvesting? It is an approach where you buy an investment property where you can afford and rent it out to someone else. And you still continue to rent and live in the area where you would love to.
Some benefits of rentvesting are –
You are able to buy a property with lower deposit.
You are more mobile and can chose to move whenever and still own a property.
Possible tax benefits associated with owning an investment property.
And if you end up selling the property at a good price you might make enough profit to then use as a deposit to buy a house for yourself – helping you to buy your own home to live in sooner.
Some disadvantages are -
When you sell your investment property you most likely will be paying capital gains tax.
While you are renting you could be asked to move out anytime and cannot make any renovations where you are renting.
First home grants are only for owner occupied properties.
Consider the interest rate charged on investment properties which is typically higher than the owner-occupied loan.
Everyone’s financial situation and goals are different. And as with any strategies, it is important to work out what your end position will be if you were to take on rentvesting approach. Consider what your income will be and what your outgoings will be.
We can help you with this approach and work with you if this approach could work for you or not. And also find you a suitable investment loan.