Many Australians nowadays are attracted to the idea of having their real estate properties but are reluctant to go ahead due to a lot of daunting challenges that await them such as a huge capital requirement, paperwork, and other technical requirements.

As a result, many choose to rent as it does not have the same capital and legal requirements, as well as gives them more freedom to transfer from one place to another since they do not have ownership of the property.

Rentvesting: What is it?

Rentvesting is a popular and trending concept that grants homeowners a great opportunity to own property, expand their investment portfolio, and enjoy the perks of their much-desired lifestyle in any location they want to live in.

The process involves buyers leasing property in an area where they live and purchase an investment property in a more affordable suburb.

This concept is popular among millennials whose social and active lifestyles are accustomed to living in inner cities, central business districts, or beach locations.

Is it for everybody?

More than half of homebuyers in Australia aged 35 to 55 have embraced rentvesting and it allowed them to experience and enjoy wider lifestyle choices.

Many of these young professionals involved in rentvesting have been managing their investment properties in an outer suburb while at the same time get to enjoy the perks of the modern and metropolitan lifestyle of renting a unit within a central business district.

This also gives them the option to quickly decide to move to another location without anything such as property ownership holding them back or delaying their decision to do so.

Making the most of rentvesting

But reinvesting is not without its disadvantages and may not be a good fit for everyone, however, it should not keep them from considering it as an investment option.

Many are reluctant to pursue it since it involves a long-term financial strategy that may take a considerable time to recoup capital investment and turn into capital gains. 

But it does have its upsides and can guarantee higher returns especially in high-demand and bustling suburbs with high rental rates.

Nonetheless, it is still important to do your research and explore available options to help you make the most out of such an investment and whether it is a good fit for you.

All the same, rentvesting can be a low-investment option while making objective decisions for your property. 

In most states, rentvesting offers tax advantages in terms of homeownership because it allows investors to claim depreciation, costs for repair and maintenance of the property, and appliances since it is considered an investment property and offers a reduction in taxable income.

Make smart and informed decisions

It is important to follow the basic principles of real estate investing should you decide to pursue rentvesting. For instance, selecting the right suburb, finding a property that is suited to the rental market, good location, and have good access to establishments such as groceries, schools, facilities, etc. 

It is also critical to carefully plan budget and spending to avoid ending up spending lavishly on a stylish apartment. Worse, you might be shelling out money paying for your investment property during vacancies or damage caused by troublesome tenants.

Consumer and market behaviours have changed dramatically over the years, especially lifestyles. It is important that to take advantage of these factors to make you experience a lifestyle you have long wanted to achieve and at the same time allow you to earn a side income.

Your decision to rentvest practically boils down to your values, priorities, and the direction you choose to take for your long-term future. If you want to pursue a traditional lifestyle, then rentvesting is definitely not for you.