Rentvesting is a home-owning strategy where you rent a property to live in that’s right for your lifestyle while you own an investment property that’s right for your budget.
At first, it might not seem to make sense – why pay off a mortgage and rent at the same time? Wouldn’t it be easier to just buy your home?
There’s no one right answer. It all depends on your budget, life stage and the lifestyle you want.
For example, perhaps you’re single and you want to get into the property market but the home you want isn’t in your price range. Or maybe you’ve scored a great rental property and the timing isn’t right for a move. Or you’re happy with inner-city living for now, even if you know down the track you’ll want to move to a more spacious home further out.
It is a way forward for people who want to break into the property market without sacrificing their lifestyle.
Rentvesting can give you the best of both worlds. You can buy a property and rent it out to cover some or all of your ownership costs, while continuing to rent the home where you live. If your investment property is earning you a profit, you could even use that income towards your home rental costs.
You might end up spending around the same if you were just renting or if you were living in a home you owned. The difference is, you can live where you want and get your foot in the property market.
Let’s say you could afford to buy in inner Melbourne and the mortgage repayments to do so were $3,250 a month, yet if you were to rent a similar property in the same location, it would cost you $1,750. You would have a “spare” $1,500 a month to invest.