If you’ve been looking for the perfect home to live in but have found it unaffordable in the last couple of years, you’re not alone.
And like others, you probably don’t want to resort to moving to the boonies or going interstate to find a property that’s half the price.
But, is there a better strategy that will help you find the perfect house to live in and still afford to invest in the market?
A popular strategy that’s been going around of late is “rentvesting”.
That means that you can live in the area of your choosing by renting and taking your money to a more affordable area, where you can invest comfortably, and hope to make gains in that market.
There are 3 great advantages of following a rentvest strategy:
- You can choose where you really want to live
As long as you can afford the rent, the world is your oyster, and you choose wherever you want to live as a rental.
The added benefit of this is that you can adjust things accordingly, depending on your income.
So, if you’re doing quite well one year, you can live by the beaches or another great area, but if things scale down, then you can always move according to that budget.
- Family considerations are more financially manageable
One of the main reasons people move is because of family considerations.
Your family might be growing, or you want that extra bedroom for guests.
Moving from property to property when you’re buying and selling comes with high entry and exit costs, like stamp duty, legal fees and selling agent’s fees.
But, by holding an investment portfolio and using a buy and hold strategy, these expenses don’t come into play.
You can simply find a more suitable rental property to live in.
- Holding an investment property brings great tax deductions
It’s important to remember that interest repayments and depreciation, don’t come back to you if you own the home that you live in.
These great tax deductions only apply to investment portfolios.
That’s why rentvest can be an excellent strategy for those who pay a lot of tax.
Many people who follow this strategy build up enough equity in their property portfolio so they can sell it down and then afford to buy their ideal home.
So, if you’re struggling to buy in the area you want to live, using a rentvest strategy can help you achieve that in the longer-term.
And of course, you get the immediate benefit of living in your dream home right away.