Rentvesting- A New Millennial Investment Strategy
This particular investment strategy has been thrown around lately and there has been a lot of skepticism about it. Does it really work? What is rentvesting really? Does it go beyond what is popular? The buzz around rentvesting is because it’s challenging the way you can get into the property market.
This topic is catchy because it involves millennials and sets an opportunity to blaze a new path. It gives an opportunity to those who want more. Those who want to rise up the property ladder- if there’s such a thing- and finally buy their first home.
The principle of rentvesting comes from two terms, renting and investing. It is an investment tactic that allows potential investors to rent property while owning an investment property that matches up to a person’s lifestyle and budget.
Rentvesting creates a chance for us to start because that’s all we need. The struggle in property ownership is to save up a deposit for your first property purchase because of all the bills you have to pay and the needs and wants that are part of our lives. As you wait, things get harder as home values in major markets rise. Also, the obligations in your life increase as you get older. It seems that you have more responsibilities than you ever imagined.
Rentvesting means that you are purchasing your first property as an investment and not as a place to live in. It’s a great way to live since you will be still living with your parents or renting with roommates at a lower cost but still save up a deposit for a property purchase. You can do this for as long as you wish and as many times as you want.
The pros of rentvesting
- It enables you to get into the property market sooner. The problem with waiting in this market is the values of properties will continue to rise as you wait. This means it would be affordable to your pocket.
- It can enable you to live with no interruptions in your life. You can still be with your parents or at the condo with your roommate while you wait for the right time to bail out and start living your life.
- You can reap the benefits of living closer to work or a city that you always wanted.
- You may gain equity quickly enough that it is to purchase a second property
- You’ll have greater tax advantages and the tenants in your properties will be paying your mortgages
- Affects your borrowing power- this is in a positive manner. If the property you have invested in is generating good cashflows, then your borrowing power will increase. The more money you have, the more options you can exploit in the future.
The cons of rentvesting
- You may not be able to access the stamp duty concessions.
- You have to balance paying rent and paying off your mortgage. If you know that you are not good at accounting and doing good research, then ask for assistance from somebody who has done something like this before. Making a poor investment choice will just dry off your pockets for no reason at all.
Where should you start?
It’s nice that you are curious about where you should start.
Start with asking for advice from your accountant, home loan specialist, and a buyer’s agent for a massive perspective on the property that you want to invest in. Then use a different set of criteria for picking out an investment property to what you would for your own home.
Amateur investors suffer from paralysis by analysis. It’s good that you are analyzing and calculating the stakes. Yes, we get that you are betting your money here, but thinking and sitting back doesn’t always help.. What matters is the part that you take action and do something about this particular investment strategy.
At Chris Price Reality, we solve this uncertainty about real estate investments and strategies. We understand that as a Millennial or someone who is new to such a new concept there is doubt about what you should do and what you should not do. Our real estate expertise will cover all of this and more.