Why first home buyers should consider ‘Rentvesting’

‘Rentvesting’ is a strategy that more Australians, especially first home buyers, are using to enter the property market and build equity faster.

‘Rentvesting’ is the process of buying an investment property while renting as opposed to buying a home to live in first.

In fact, the trend has become so popular that according to a recent Westpac/Herron Todd White study of Australian home buyers, 13 percent of first-home buyers are choosing to ‘rentvest’ before they buy an owner-occupied home.

You may be wondering why people might choose to delay purchasing their first home.

Well, ‘rentvesting’ can be more affordable as an entry into the property market and it offers flexibility to buyers. The flexibility of living where you want and maintaining lifestyle choices that come with preferred locations, while still building wealth through the investment.

How can I afford to pay rent and have an investment loan?

We get this question often, and the answer is quite simple. When you have an investment property you generate rental income when your tenants pay rent. This rental income is directed into the investment loan. Ultimately the out of pocket expenses for investors is surprisingly low.

When you consider rental income, plus the tax benefits that investors receive, the ‘rentvesting’ strategy becomes more affordable

Will this delay the process of eventually buying my first home?

This is another question we are asked quite often. ‘Rentvesting’ may often allow you to purchase your first home sooner than you think. This is because while you generate rental income and repay your investment, your property value increases and you build equity within your investment.

This equity can help you buy your first home. Alternatively, your investment property provides you with an asset that you could also sell – that money could go towards your first home.

 

If you have any questions about ‘rentvesting’ or for a free affordability check just email property@whitestar.com.au or call us on 1300 652 842.