For many of us, the dream of being able to afford a home in a suburb we actually want to live in remains as strong as ever. Unfortunately, many affordable properties are often found in less desirable suburbs.
So, finding an affordable property that comes with your preferred lifestyle amenities, is near where you work, and is handily close to your family can be out of range financially.
Deciding whether to rent and/or buy an investment property can be quite a juggling act.
What is ‘Rentvesting’?
Rentvesting is a property investment strategy that entails buying an investment property ahead of your dream home. It enables you to acquire assets and build your net worth while living in your preferred suburb.
Rentvestors acquire a property that fits within their budget in an affordable location. In the short term, rentvestors rent an apartment or a house to live in, in their preferred location. It is often more financially feasible to rent a home in an in-demand location than it is to buy into it.
This fundamental financial approach is powering the rentvesting strategy transformation.
Your equity can later be leveraged to acquire your own home.
One clear fact is those who rent their entire lives and don’t have any property to fall back on upon retirement, run the real risk of homelessness in older age.
The main benefit of adopting a rentvesting strategy is it enables you to dip your toes into the property market quicker than if you had to wait to save up a huge deposit for a home in a high-demand suburb.
Most successful property investors acknowledge that the faster you enter the real estate market, the faster your investment property can begin accruing capital gains enabling you to accumulate wealth faster via your property assets.
Rentvesting as a strategy is particularly effective in a rising market. Once established, you may gain equity you can leverage to buy another property that’s also located in an affordable suburb.
Your second property doesn’t need to be one you’d see as your ideal home, it’s purely a rental property. But the upside is, with rentvesting you’ll own two properties hopefully increasing in value, two sets of rent-paying tenants covering your mortgages for you, with the added benefit of tax advantages on your investment property.
Research Determines Rentvesting Success
Acquiring an investment property inevitably involves compromising less on location. You can focus on an investment that may deliver the highest capital gains to you.
Diligent research is the determining factor to enjoying a successful rentvesting strategy. Your investment property should be capable of delivering consistent drama-free income while simultaneously achieving consistent capital growth.
Success hinges on identifying a suburb and a property with the potential to provide capital growth. You then carefully review the available housing stock in your target suburb to identify a property that best meets your criteria.
Done well, with the right due diligence Rentvesting offers the opportunity to enjoy the best of both worlds. It gives you the ability to build a property portfolio by leveraging equity once your first investment property has generated some capital growth.