Rentvesting: Have your cake (or smashed avo) and eat it

rentvesting mortgage advice Toowoomba

Why rent when you can buy? This has been the catch cry of developers, real estate agents, banks, and probably your parents (and their parents). The thinking is that if we’re going to be paying for somewhere to live, then it makes sense to channel that money into an investment.

There are many reasons why we might choose to rent at various points in our lives, however this doesn’t mean turning our back on the Great Australian dream of home ownership. This is where the concept of rentvesting comes into play.

But first, what is it?

Rentvesting is where you rent in the suburb of your lifestyle dreams, while buying in the suburb of your fiscal reality.

It’s not a bad way to get into the property market, because it means you get to lock in today’s prices without having to move to a suburb that may not appeal to you.

And let’s face it, the ‘housing bubble’ that naysaying commentators have warned of for eons shows no sign of popping, so there are definite upsides to entering the market sooner rather than later.

Any downsides?

This article is not to be confused with advice, of course, so definitely get in touch if you’d like our expert guidance.

What we will say is there are a few things to be mindful of when considering rentvesting as a wealth building strategy.

First, you wouldn’t be eligible for any of the first home buyer’s grants – as these only come into play when you’re purchasing an owner-occupied property.

Second, it’s not necessarily a landlord’s market these days, so make sure you do your due diligence when researching how much rental income you can expect. Speak to a local agent for insight into the property market, and think about how you’d manage – cashflow-wise – if you didn’t consistently have good tenants.

Third, capital gains tax (CGT) is applied to the profit you make when you sell an investment property. Definitely speak with a switched-on accountant for this one, because it could be the difference between a sound investment and an expensive learning experience!

Final thoughts

Everyone’s got an opinion on property. It’s an Australian pastime! This article isn’t intended to sway you one way or another, but we do hope it’s given you food for thought on what to consider when it comes to deciding on whether rentvesting’s right for you.

Hit us up if you need a recommendation for an accountant or real estate agent here in Toowoomba. We have good relationships with some of the best ones and would happily recommend them to you.

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