Rentvesting is a term that has been brought to the surface of the property market in the more recent years and has home buyers questioning what exactly it means…
To put it simply, rentvesting is a strategy of living that allows you to purchase a home in a suburb that you can afford, while renting in a location that fits your preferred lifestyle. This practice is growing more popular as purchasing property in the city is becoming awfully difficult for new home buyers. Because home prices surrounding the city are exceeding the average budget for property owners, people or “rentvestors” are buying properties that they can afford and renting these homes to others. Meanwhile rentvestors will continue to rent in their ideal suburb, playing the role of both a landlord and tenant.
Purchasing as a rentvestor comes along with a variety of long-term benefits. To begin, rentvestors generate income from both their tenants who are renting their property as well as the tax benefits they receive as Investment property owners. Although the idea of rentvesting may seem financially strenuous as you are required to pay both rent money and a mortgage, the cash flow has proven to be far better in the long-term than occupying your purchased home. Additionally, the cost of your tenants rent will compensate the cost of your mortgage repayments, while the value of the property will organically grow on the side. This will allow you to make money on the side and use a portion of your sole income to pay rent in a location that you love to live in!
When it comes to implementing strategies that involve financial adjustments, we always recommend speaking with a financial advisor before making any rash decisions. Rentvesting demands a degree of preparation, information, and organisation; and you will still be required to financially prepare for the usual costs associated with purchasing a property beforehand.
Ultimately, any strategy that involves investing comes with a degree of unpredictability, however, the idea of rentvesting is becoming more recognised in current financial and property sectors. At Domaine, we provide internal financial advice to our clients and have a team of experienced professionals behind us to help you! Reach out today to speak with one of our experts!