Rentvesting is a property strategy that allows you to get a foot in the property market by buying an investment property where you can afford, while still being able to rent close to your family, friends, work and life. The best of all worlds.
This strategy is becoming increasingly popular amongst young adults and first-time investors as an alternative to traditional home ownership, especially for those living in big cities, like Sydney, where the price of home ownership is notoriously high and often leads to a sense that you can never get into the market.
In order for this strategy to be successful and sustainable,the investment property should have a positive cashflow (i.e.income from the property is greater than the costs).
You could spend a lifetime slowly working off a crippling Sydney mortgage, or, with the right investment property, you could begin building wealth and savings through property investment.
What would you do with the spare cash? It would be smart to pay down the mortgage or pay off debts; but you could build a buffer of cash for a rainy day or possibly save for a deposit on another investment.
Good, safe investment properties start from about $500,000 (sometimes a little less). Rentvesting allows you to get a foot in the property market now rather than waiting until you save much larger deposits to buy into the Sydney market at some far date in the future.
Rentvesting suits so many investors as it offers flexibility and security. With positive cash flow comes opportunity.
Some people are happy to rent forever in the place of their choosing while building a portfolio of investment properties where it was smartest to invest. Pro-tip- sometimes the strongest growing regions in the country are not in your state. Often these investors will leverage their growing equity to buy a second or third property.
Some people have medium-term goals to rentvest for a pre-determined time, then sell and bring the growth and savings back to Sydney to buy their dream home.
With time on your side and the right guidance, you might find that in 10-20 years’ time, you may be in situation where you own a portfolio of properties big enough to replace your income or even offer you an early retirement – the sky is the limit.
Another benefit to rentvesting is that it gives you a focus for savings as it allows you buy into the property market now. Cash that otherwise might be spent on more frivolous items like holidays, cars and boats (bad debt), is instead directed into your new property (good debt).
Rentvesting is a strategy rising in popularity which allows you the flexibility of renting in an area you love while strategically buying in an area you can afford.
Identifying the right investment opportunity with good fundamentals is essential in successfully setting up a positive cash flow scenario to supplement your income.
If you, or your partnership have at least $80,000 saved up and a solid regular income you might be surprised what is possible.