A Quick Guide to Rentvesting: Your Strategy to Enter the Property Market

The Australian property market has been exceptionally challenging over the past 12 months, with interest rates doubling, inflation rising and the looming threats of market downturns and recession in the media. 

For those aspiring to get onto the property ladder, the situation has been particularly daunting.

The escalating prices of properties, coupled with the high cost of living and limited household budgets, have left many properties in Sydney, Canberra, Brisbane and Melbourne out of reach for first-time home buyers.

But you don’t have to shelve your property-buying plans! Why?

Well, there’s a way for you to live in your desired location while also investing and earning in the property you can afford.

This smart real estate strategy is called “rentvesting” and I’ll discuss more about this today.

What is rentvesting?

Rentvesting is a practical and effective approach to gaining a solid foothold in the property market, allowing you to purchase an Australian property without compromising your lifestyle or financial stability.

It’s ideal for people who wish to invest in real estate but can’t afford to purchase in the specific location they prefer to live in.

So, how does rentvesting work?

With rentvesting, you BUY a cheaper property in a more affordable area and lease it out, while you RENT a home to live in your desired location.

Simply put, rentvesting enables you to:

  1. take advantage of rental income and potential price increases from your property investment
  2. while also giving you the freedom to live in a place or suburb that might otherwise be financially unattainable.

Rentvesting is a clever way to navigate the hindrances in the property market – so it’s no wonder it has become a popular strategy even amongst Australian Buyers Agents.

What are the benefits of rentvesting?

I’m sure you’re curious to learn more about rentvesting and the reasons why people find it a strategic option to enter the Australian property market.

Well, let me share some of the key benefits rentvesting provides, especially for people buying property in Sydney and Canberra.

Flexibility and mobility in lifestyle

Rentvesting presents greater flexibility, empowering you to easily adapt to changing life circumstances. 

So, if you want to pursue new job opportunities, accommodate family changes or deal with other personal matters, you can make necessary adjustments really easily by leasing a different home.

As you’re renting where you want to live, it doesn’t require you to be tied down to a specific location. That’s why I often recommend rentvesting to people in the Defence Force, contractors or those with dynamic careers who move around a lot. Or you could just be someone who loves change!

Cost savings and wealth creation through property investment

Through rentvesting, you can start building your real estate portfolio while keeping your living costs manageable. 

Rentvesting allows you to purchase a property in a more affordable location, say a rural or regional area, and then rent it out at a reasonable price.

This means the rental income you generate from your property can be used not only to cover your ownership costs but also to potentially offset the rent you pay for your desired location.

Furthermore, the property owned through rentvesting may appreciate in value, leading to long-term capital gains that you can use to accumulate wealth or buy your next ideal property in the future. 

Tax benefits

Rentvesting also provides valuable Australian tax benefits, making it an attractive strategy for investors who want to save more.

In fact, as a rentvestor, you can claim tax deductions on:

  1. building depreciation and new fixtures and fittings
  2. interest charged for property loans
  3. rental costs such as insurance, advertising and maintenance

Just don’t forget to consult your trusted tax professional to accurately identify and claim all your eligible tax deductions. 

With rentvesting, you don’t have to abandon your property-buying plans

Rentvesting unlocks the doors to the real estate market so that you can invest in an affordable property and achieve long-term financial gains without giving up the lifestyle you want.

For instance, when you’re renting, there is always less security as you have less control. There are also times when rental costs increase, you can’t make certain changes to the home and you have to be available for inspections, open homes and so on. 

Additionally, you have to pay close attention to how your owned property performs, and be mindful of this. For instance, keeping an eye on balancing property ownership costs in addition to your rental payments and even capital gains tax.

This is why it’s important to seek professional advice and guidance from property experts who can help you make well-informed property decisions.

Fortunately, there are Buyers Agents (like our team at Brady Marcs) who have in-depth knowledge of the NSW and ACT property markets, a strong professional network and years of expertise to help source the best properties that will give you the ideal lifestyle, comfort and capital growth you deserve.

Brady Marcs is your trusted NSW Buyers Agency and ACT Buyers Agency 

In today’s extremely competitive Sydney real estate market and Canberra property market, buyers need a dependable and empathetic Buyers Agent to help them get in, secure the best deal, negotiate on their behalf and represent their interests.  

Brady Marcs Buyers Advisory is an experienced and dedicated Australian Buyers Agency with a genuinely passionate team that guides you through the entire property buying process. From first-home buyers to seasoned property investors, our integrity and expertise are for everyone, every goal and every property.  

Our team can help you find the ideal balance to make rentvesting work for you! 

Contact us today to see how we can help you take a better property journey approach.