Rent in the location where you want to live, invest in an area you can afford.
Rentvesting is a strategy for gaining a foothold in the property market. An investor may be living in a location where they cannot afford to purchase. For example, in an inner city location close to work. The strategy is to rent in this location but to buy a property in a location they can afford, e.g., an outer suburb or regional area.
Rentvesting is a strategy for 2 categories of investors to establish themselves in the property market:
1. Young Australians - the home ownership dream for most young Australians has become unaffordable if they want to live in the inner city locations, they grew up in.
2. Own a home or investment properties - access existing equity in a property to buy an additional property.
Buying an investment property where we can afford to invest is an effective first step into the property market. It has the additional benefits of:
Tax deductions – depreciation and deductions
Freedom – to live where you want
Wealth creation – investments with tax benefits become the deposit
Capital Edge has produced educational materials on Rentvesting, refer to our videos.
Rentvesting gets you into the market with the tenant and government funding the investment. The following example illustrates these points.
Why every Australian should consider rentvesting
Buying an investment property in an affordable suburb while renting and living in a more desirable area can be the stepping stone towards a property portfolio and financial security. By Anna Porter, Principal, Suburbanite