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If getting into the property market is your goal, rentvesting might be the pathway to success.
It’s possible to break into the property market without sacrificing your lifestyle and rentvesting may be the way forward for you. The home-owning strategy is popular with 45% of respondents in the 2022 PIPA Annual Investor Sentiment Survey indicating they’d consider rentvesting.
The strategy allows you to rent a property that suits your lifestyle while owning an investment property that suits your budget. This means you experience the best of both worlds. Live where you want to and make your money work for you by renting the investment property out.
The primary benefit of rentvesting is keeping your lifestyle location while entering the property market in a more affordable area. For example, buying in Sydney may cost upwards of $1 million, while a larger house in a booming regional area might be $700,000. Renting out the regional property helps cover ownership costs. On a profit-earning investment, you can cover your own rental costs and create passive income.
The sooner you get into the market the better and rentvesting offers a foot in the door. You can use the equity from your first investment to purchase another and start generating capital gains. With two properties gaining equity, you’ll have two sets of tenants paying your mortgages and better tax advantages.
Potential tax benefits* include claiming some of your investment property expenses as tax deductions, such as insurance, depreciation and the interest paid on your loan. In terms of capital gains, you could sell your investment property for a profit if it increases in value in the future.
The sooner you get into the market the better and rentvesting offers a foot in the door.
When you don’t need to consider your personal preferences in buying property, the scope is much wider for entering the market and building a property portfolio. Research is therefore focused on locations with capital growth potential and affordability.
As a first step, you need a strategy to evaluate your current position and develop a framework for success. A team of qualified and experienced people help you discover if rentvesting is right for you, along with steering you through the process. This is the successful approach Mel and Chad Holmes took upon meeting with DPN.
Like many Australians, Mel and Chad shared the dream of buying a home they wanted to live in. They became disenchanted with the dilapidated houses selling for almost a million in Sydney’s Sutherland Shire. Their budget couldn’t stretch to repair works, let alone renovations.
Upon meeting with DPN to get pre-approval for a home loan, one of the DPN Directors suggested rentvesting as an alternative way into the market. After a thorough investigation of the couple’s financial position, borrowing capacity and future plans, a strategy was implemented to enter the market in growth areas with two house and land packages for dual income homes.
With brand new properties built and rented out, their investment journey has them on track to financial success. If you think rentvesting might be the right strategy for you, the team at DPN are happy to answer your questions.
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