In this article by Danielle Cahill from realestate.com.au, she explains the term and trend of rentvesting!
“One of the growing trends seen in recent years as house prices in inner city areas have risen, is that more young people are getting into rentvesting.
Working professionals are buying properties on the outer edge of the city or in an area where they can afford to and renting that property out while renting a home for themselves closer to the CBD in an area where they would prefer to live.
“I think it’s a fantastic idea, not just for younger people. We’ve helped dozens of clients go down the rentvesting path,” says Propertyology Managing Director Simon Pressley who adds “this affordable option can help out downsizers as well as first home buyers.”
Rentvestors can be “significantly better off” renting where they are comfortable living while buying where they can afford to, says Pressley. Rentvestors should research their options and consult a qualified financial advisor to ensure that the sums work in their favour, he adds.
If house prices in areas within 15km of our CBDs keep rising, is it time for some home buyers to radically reassess their options as reintvestors ?“
For further advice call Positive Properties now on 0405 100 146 to find out more about our variety of buy and hold strategies or contact us at www.positiveproperties.biz/contact/
This can also work as an option for some people struggling to pay off a mortgage, which means that the tenant contributes to the mortgage as well as covering the rent.
Clear as mud?
Let me tell you about Kevin and Jane
Kevin and Jane’s Story
Kevin and Jane up-sized from a unit to buy their dream family home in a coveted suburb in Sydney.
Shortly after moving in they realized that, as it was situated below a cliff, it was always in shadow and during the winter it was extremely cold. Jane was at home most of the time with toddler and baby, hence their electricity bills were through the roof. They put up with this for a couple of winters as they didn’t want to go to the expense of selling and then buying a new home.
In the meantime Kevin had got a promotion at work which put him into a higher tax bracket
– which actually mean’t his take home pay was less, and they were already struggling to pay the larger mortgage.
So I suggested to them “Rentvesting”
They knew that they could get $800/wk in rent for this house.
So they moved into a lovely sunny house in a nearby suburb, paying $600/wk in rent.
This gave them an extra $200/wk to go towards their mortgage plus much cheaper electricity bills.
The added advantage is that their original home is now an investment property so they can claim depreciation and expenses against their tax.
They also keep their prestige house and will reap the benefit of Capital Gain in the long term.
What’s all this information worth to you?
If you are like a lot of other people struggling to pay the mortgage and believe you can’t afford an investment property or don’t know how to get started phone Positive Properties now on 0405 100 146 to find out more about our variety of buy and hold strategies
or contact us at www.positiveproperties.biz/contact/