Rentvesting is not a new concept in the world of property, but it is becoming more popular.
A combination of “renting” and “investing”, rentvesting is when buyers rent a home in a neighbourhood they want to live, for lifestyle reasons. But then invest their money in more affordable regional areas where they have more buying power.
The current property boom is largely driving this trend. House prices are going through the roof and some buyers getting priced out of capital city markets are now turning to more affordable investment locations like the Sunshine Coast.
Many rentvesters are young people who won’t even come close to being able to afford their dream house at the moment. Rentvesting is a way for them to break into the market.
With a small deposit loan from “the bank of mum and dad” (if they need it), they’re able to invest in a high-growth property that is paying itself off. And with the cash flow and tax benefits, they can not only cover their bank loan repayments but also repay their parents the deposit amount.
It means young people get a foot on the property ladder and still live where they want, while parents are able to help set them up financially.
Importantly, the key to rentvesting is time. It’s a long-term strategy that relies on building equity growth over a number of years. Before making any decisions, investors should do their research, talk to an expert and find a strategy that suits their individual financial situation and goals.