Last updated 04 August 2020
Yes, we know it kind of sounds made up, but we wanted to let you know what it is and if it could be an investment option for you.
Rentvesting is the process of purchasing an investment property in a more affordable area, and renting to live in a different location. It’s the ability to make your way on the property ladder, but not at higher cost of buying in the location you want to live.
Many individuals in Australian cities are finding that the cost of buying a property in a location they’d like to live is out of the question – which is where rentvesting can come into play. The 2019 PIPA Investor Sentiment Survey found that 63% of investors said they would consider rentvesting.
Here’s a breakdown of the pros and cons:
Some quick pros
- Ability to enter the property market sooner – you don’t need to save as much of a deposit, which can generally take years of saving
- Start building your investment portfolio – this can allow you to build your wealth, equity and set yourself up in the future
- Live where you want to – while you might not have been able to buy in your preferred area, you can still live where you want
- Flexibility to change – if your family situation changes, or you’re looking for a new location, you’re not tied down by purchasing a house to live in
A few cons
- Not buying a house for yourself – depending on how you saw your home buying journey, you might have preferred to buy the house for yourself
- Restricted by rental rules – you also don’t have the ability to change what you like about the place you’re renting to live in, you can’t change the wall colours, etc.
- Renting is temporary – since the place you’re renting out isn’t yours, you may be asked to leave no matter how much you don’t want to