“Rentvesting” is one of the biggest terms within the property market which has come up within the last 12 months. The idea is people continuing to rent but while purchasing an investment property. This is particularly popular within the areas of Sydney and Melbourne with property prices being somewhat unobtainable to some.
These are helping many people get into the housing market, which is something that many people fear that they will not be able to reach. However, there are still many people trying and wanting to reach the Great Australian Dream, so something must give.
There can be many benefits of doing this, from lifestyle improvements to tax incentives.
Many people prefer to live closer to the city of their choice, to enjoy shorter commutes to work as well as being close to the amenities in these areas. However, houses in the outer suburbs or even other cities are significantly cheaper than trying to live within a 10km radius of the CBD.
When you rent your home as opposed to buying, you can then claim many costs involved in your tax. These include management fees, advertising fees, depreciation, maintenance/repairs, interest on your home loan etc. With the benefits of tax incentives, this can save you money as compared to be an owner-occupier.
By using the purchase of a home to develop equity, this means that people are able to then in the future purchase a home in their desired location as well as chosen condition.
Due to the above reasons, this culture of “rentvesting” has increased. There is an estimated 1 in 3 first home buyers opted to invest in property while renting (2016, PIPA).
This trend looks like it is here to stay. More people are learning the benefits that this can give you in achieving both short and long term goals.