Should you rent or buy? As house prices have risen across Australia's cities, it's becoming increasingly hard to break into the market. This has prompted some buyers to reconsider their approach and turn to rentvesting: instead of buying the property they want, people rent a home in their desired suburb and invest their leftover money in housing in more affordable suburbs.
In 2016, one third of investors were 'rentvesting' as the strategy becomes increasingly popular for those entering the market. The tax incentives available to investors who choose this approach explain the appeal of this new breed of investing.
Why should you rentvest?
Build wealth: By rentvesting you can enter the market sooner and start building your investment property portfolio without taking on a large mortgage.
Tax benefits: Interest payments on your investment property loan can be claimed as a tax deduction, reducing your overall taxable income.
Lifestyle benefits: You can live in your dream home in an expensive suburb and close to work without the burden of a large mortgage.
Flexibility: Rentvesting gives you the ability to move whenever you feel the need without having to worry about going through the arduous process of selling.
What are the reasons to not rentvest?
Investing before buying: Some first home buyers would prefer to buy their own before purchasing an investment property.
Home ownership: Renting prevents you from fully tailoring the home to your needs, such as renovating or making some slight changes.
For further advice and to discuss rentvesting strategies, contact our Managing Director Shayne on 0408 000 420.
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