What is a rentvestor?
Another way to benefit from owning a home is to buy an investment property. This way you can rent where you want to live (lifestyle living) and buy where you can afford. This rent and invest strategy is known as rentvesting and it’s becoming more popular. It’s also a way for home buyers to get a foot on the property ladder.
Buying and selling an investment property means you can wait and hope that real estate prices increase over the long term. If you charge less rent than what you are making in mortgage repayments, the net loss can be used as a tax deduction, which is known as negative gearing or having a negative cash flow.
This way you could save your way to wealth. If you’re paying rent and that’s your only interaction with the property market, you’re going to be renting your whole life. Rentvesting is simply renting where you work and buying in another area. At least if have a rental property that you’re renting to someone else, you’re in the market.
It’s important to start young in the Property market and it is like a forced savings program. If you don’t spend your money on property, you’ll probably spend it on something else: you’ll buy more holidays, a fancier car, more clothes – which are all depreciable items which decline in value the minute you buy them.
Sure we need cars, we need clothes, but you have to balance that out with saving for the future.
We read an interesting stat that house prices have surged 6556% since the early 1960s (an average rise of 8.1% each year over 56 years, according to a Bank for International Settlements white paper) – so even though markets are currently taking a hit, if you have a long term view you will end up ahead.
Given you can get a home loan without a deposit, and even borrow up to 105% of the property purchase value now is a great time to get into the market. Take advantage of this blip in the market and don’t be one of those people that look back on this time and say, wish I had bought back then.
Want to know how much you can borrow? What your repayments will be?
Contact Boss Money today
0476 111 000