Image for Are you considering rentvesting? Here’s what you need to know.

Are you considering rentvesting? Here’s what you need to know.

For many people, purchasing their dream home is not a realistic goal when venturing into the property market for the first time. Often, people find that as a First Home Buyer they cannot afford a property in their preferred area, instead opting to engage in a concept known as “Rentvesting”.



Rentvesting offers people an opportunity to get a foot in the door of the real estate market and begin building equity and their property portfolio. This process simply involves purchasing property in an affordable location and renting it out to tenants, while renting themselves in the location the Rentvestor can’t afford to buy in, but where they prefer to reside.



While this may seem like a simple concept, the lived experience may not be as straightforward as the Rentvester had hoped. Unfortunately, recent data shows that over half of Rentvesters surveyed rated their financial stress levels at 6/10 or higher, with the majority of that stress being caused by underestimating the costs involved with being a landlord. On top of this, owners also experience significant financial strain when managing periods when the property was untenanted.

If you are considering Rentvesting then it is extremely important that you establish a clear budget and fully understand all the monthly outgoings in order to service your loan, rent and other expenses such as rates and insurance.



Not all loans are created equal, and lenders often manage investment loans differently to owner-occupier loan products, with the former subject to higher interest rates and stricter conditions. Almost half of the Rentvesters were unhappy with their loan product and were seeking to refinance within 6-12 months, so it is worthwhile researching a broad range of products and seeking professional advice prior to signing on the dotted line.



As with all property transactions it is extremely important the buyer is well informed and aware of the financial implications of both their property purchase, as well as their financial products. Beginning and building your property portfolio, or simply achieving the milestone of becoming a First Home Owner can be an exciting and satisfying time, providing it is supported with good advice and a strong financial plan.

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