In 2016, approximately one-third of property investors were also renters.* That number has only gone up, mostly due to rentvesting.
Rentvesting is a term you might not be familiar with, however, you’re probably familiar with what it means. Simply, rentvesting is a strategy to become a homeowner while still being able to live where you want. Rentvesting means owning your own investment property while simultaneously renting your own primary place of residence.
Because the cost of home prices in popular areas within cities has gone up astronomically, this strategy of homeownership has become more and more popular. It allows people – especially those that are young – to live in a home that fits their lifestyle while being able to own an investment property that fits their budget
Why Rentvest?
This is a question that you’ll need to carefully consider along with your budget, where you are at in your life and the lifestyle you want to live. While the idea of paying off a mortgage and renting at the same time might seem counterintuitive, it’s a great way to build equity in a home at a smaller budget while still being able to live in the ‘hot’ location in your city.
For example, young single people may find it difficult to meet the budget requirements for a down payment in the neighbourhood of their choice but still want to get into the property market. Another example is a young family who wants to stay in the city short term but can’t afford to buy in the city and their long term plan is to eventually move somewhere more spacious outside of the city centre.
Rentvesting can allow you to have your cake and eat it too. You can buy an investment property and rent it out to cover some or all of the costs involved in owning a home while simultaneously continuing to rent in your chosen neighbourhood. This is a great way to both build equity in the property market and earns income over the long term if the property value goes up over time. In some cases, rentvesting can even allow you to decrease the amount of your own rent bill if you’re able to earn a profit off the rental of your owned home.
Cons of rentvesting
- Where you live will be less secure than owning your home because you’re renting: if the homeowner decides to sell or increase rent, you may have to move
- Homeownership costs: as a landlord, you’re responsible for the costs of maintenance to the home as well as any costs you may have to lease out your property
- If you sell the property, you’ll likely be liable for Capital Gains Tax because you’re not living in the property
- You won’t have access to the First Home Owners Grant
- If there is a lapse in the market or the value of your home goes down and you decide to sell in the future, you will be responsible for the lost value
Why choose LiveInvest as a first time home buyer?
- Fast Approvals: When you’re a first time home buyer in a competitive market, time is of the essence. It’s important to have a mortgage broker that values this advantage in the process and we know that it’s important to you to get results as quickly as possible. With fast-track loan options and streamlined application processes, LiveInvest is dedicated to getting your first time home buyer loan approved quicker!
- Convenience: First time home buyers are hardworking and busy individuals. Their time is valuable and we at LiveInvest put our customers first so that you don’t have to spend time sitting in a waiting room or bank queue in order to lodge your loan application. Flexibility is one of our core values and that means that our brokers visit you at the time and location that’s most convenient for you.
- Range: We offer products to suit the needs for every first time home buyer. We appreciate that everyone’s situation is different and therefore, it’s important that we cater your solution to your specific set of criteria. Let us know if there are certain specifications we need to be aware of to fit your situation and we’ll find an affordable solution for you!
- Relationship: Unlike most mortgage brokers, our first time home buyer service goes beyond the settlement of your new loan. We provide ongoing support, even after you are approved for your first time home buyer loan, to ensure that you continue to have access to the best finance solutions on the market!
- Network: We are partnered with some of the best local professionals and businesses, so we can help you get the right advice and best service on the market!
Use our mortgage affordability calculator to figure out what your loan repayment might look like. If you’re interested in hearing more about buying an investment property, call us today at 1300 831 288!