Rentvesting… the new Australian Dream?
Every second news article or political speech of 2017 seems to have two words in them: housing affordability. If you’re in your twenties it’s probably become a common topic of conversation among your mates.
If you are a first homebuyer looking to break into the property market, you will know that prices are increasing and competition is hot. Homes that were $500,000 a few years ago are now selling well above this amount, forcing buyers to look at properties further out from the city in areas they didn’t even want to consider.
You end up needing to make a choice… do we keep our lifestyle close to work and friends in an area we love or do we make the financially sensible choice of sacrificing that to buy a house further out? A new strategy has emerged where it doesn’t have to be one or the other.
Rentvesting is where homebuyers purchase an investment property first and get tenants in, whilst continuing to rent in the area they love. It’s become a popular option in recent years.
What are the advantages?
- Live the lifestyle you want now and still building a property portfolio for the future
- Potentially enter the property market sooner while you still save for your dream home
- Flexibility to move for work and travel
- Investing where you see opportunity and growth. It could even be outside of Victoria
This strategy doesn’t suit everyone and there are certainly disadvantages to this approach. That rent money could be used to pay off your mortgage faster for instance.
In a housing market that can seem nearly impossible to enter, it’s great to have another option to discuss. As with any financial decision, do your homework and know your position so you’re informed and in control. Make an appointment with our team if you’d like to chat about the first steps to home buying.
Blog post by Invictus Finance
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