Rentvesting Explained – Part 1

Sometimes the ideal location we would like to live in doesn’t match up with the suburb that is best for us to own a home in.

It might be that where you want to live doesn’t have homes available to match your budget right now. Or maybe, you understand the value in home ownership, but prefer the flexibility of renting at the moment.

If so, you should get familiar with ‘rentvesting’.

 

What is Rentvesting?

Rentvesting is a property ownership strategy that involves renting a property in your desired location while investing in owning a property elsewhere.

In a nutshell, this approach balances lifestyle and financial goals for many. Rentvesters can enjoy the lifestyle benefits of their preferred location while simultaneously building wealth through property investment.

 

Who is Rentvesting best for?

Rentvesting can be an ideal choice for many categories of prospective home-owner. It may suit first-time homebuyers who cannot afford to purchase a property in the location they’d like to live in due to high prices.

For some, work may impact where they can live, or proximity to family or certain amenities can drive this preference. Rentvesting means you can continue to live where you want or need to need to, without compromising on investment goals and entering the property market.

 

Is Rentvesting worth it?

Rentvesting offers several potential benefits. It allows you to enter the property market and start building equity, even if you can’t afford to buy in your desired location.

Rentvesting provides flexibility and freedom to choose where you want to live while investing in an area with stronger growth potential or better rental yields. Of course as with any financial decision, it’s important to consider individual circumstances and market conditions  — best achieved with a qualified financial advisor.

 

Weighing up the pro’s and con’s

Rentvesting Buying Home First
Purchase your dream home First Home Owner’s Grant
Live where you want Pride of Ownership
Improve cash flow No Capital gains tax
Rental income Stability
Tax benefits
Better borrowing capacity
No lock-ins
Fast track your wealth creation
Asset not liability
Try before you buy

 

Potential tax benefits of Rentvesting

Rentvesting can also offer tax advantages. As an investor with a rental property, you may be eligible for deductions such as interest expenses, council rates, property management fees, repairs and maintenance and more.

These deductions can help offset rental income and reduce your taxable income. Again, consulting with a qualified finance or taxation professional is important to receive personalised advice tailored to your specific situation.

 

How Fairhaven can help

Rentvesting can be an effective strategy for aspiring homeowners looking to balance lifestyle choices and financial goals.

We can support you in a savings plan, finding home designs or house and land packages that align with your financial goals — reach out to our team for a chat to get started.

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