Rentvesting: A smarter way to invest
I’m sure you’ve heard the phrase, but what does it actually mean and what are the benefits??
Rentvesting refers to the growing trend of buying your first property as an investment while you rent elsewhere. People typically buy somewhere they can afford to (usually in a new, outer suburb with where the supply of land is almost endless) while they rent somewhere they want to live (perhaps an inner-city location just a few minutes from work and close to great schools, restaurants and a buzzing nightlife).
The opportunities are for investing are many and include things like:
Most rental expenses are tax deductable, including the interest repayments you make every month on your investment property. Other expenses like advertising, body corporate fees, property management fees and landlords insurance can also be claimed – couple this with maximum depreciation write downs if you purchase a new property and the tax incentive can see you owning a 600,000 investment property for less than $30 pw after tax.
Living for now
Renting gives you the freedom that you don’t necessarily get while occupying the property you own. Plus it’s also often cheaper to rent in your ideal location than it is to buy and live in. rentvesting lets you live where you want to live and enjoy the lifestyle that’s right for you right now.
Building your portfolio faster
Rentvesting allows you to get into the property market much quicker than you might have otherwise. Rather than waiting and saving for a huge deposit for that perfect first home in a location you can’t quite afford, you can choose a cheaper – but no less lucrative – property in a location you can afford. Get some renters in there and your mortgage will fast dissipate.
The complexities of the Australian property market mean that having the right information at your fingertips is crucial when it comes to deciding how best to invest the equity in your home. If you’re not sure where to go for the facts you need in order to make the right decision, we can help. With a wealth of experience in the property market in Melbourne and Brisbane, we’re ideally placed to assist investors wishing to take advantage of the fantastic property investment opportunities available in the area. Find out more here.