The Pros and Cons of Rentvesting

27 April 2021

The Pros and Cons of Rentvesting

If you’re looking to buy a property but don’t want to change your current lifestyle, you might want to think about rentvesting. ‘Rentvesting’ is buying an investment property you can afford while renting a home that you prefer to live in.

To find out if rentvesting is the right option for you, let’s look at both the advantages and disadvantages:

The pros of rentvesting

  • More freedom

When you rentvest, you can easily move to a different location if your circumstances change. You also have the freedom to downgrade or upgrade to a more suitable home without paying any legal fees.

  • Breaking into the property market sooner

Instead of saving for years for a deposit on your dream home, rentvesting allows you to enter the property market sooner.

  • Lifestyle

By renting a property in a better location, you can enjoy the lifestyle you want without committing to an unrealistic mortgage.

  • Tax deductions

There are many tax benefits of rentvesting. You can claim rental property expenses as tax deductions, including interest payments on your loan.

  • Savings

Buying an investment property can allow you to save money while you’re renting. You’re also building up your investment portfolio and helping to secure your financial future.

The cons of rentvesting

  • Costs

There are costs of owning an investment property. You will usually be responsible for any repair costs that arise. You may also have to pay a property manager to help you with leasing it to tenants.

You should ensure that your rental income (including tax savings) is higher than your ownership costs. Otherwise, you will have to cover the difference (as well as pay your own rental costs).

  • Less security

Since you are renting where you live, you may have to vacate if your landlord decides to sell or change tenants. You will also have regular inspections, and the price of your rent may increase over time.

But if you want or need flexibility, less security isn’t a bad thing.

  • You won’t own the home you live in

Even though you will own a property somewhere, you will only be renting your home. You are far more limited when it comes to decorating your property and truly making it your own. Usually you won’t be able to renovate, paint the walls or make any serious changes to your home.

But you will be free to do those things with your investment property.

How we can help

If you’d like to use rentvesting to enter the property market, our experienced and licensed brokers at Wisebuy Investment Group can help you find the right loan for your needs. We can also help you with your application.

We service a diverse range of clients in Newcastle, Lake Macquarie, Port Stephens, the Hunter Valley and the Central Coast.

Contact us today for an obligation-free chat!