What is a rent-vestor and how you can be one
A clever and increasingly popular way to get into the property market is to become a rent-vestor. Its principle and logic are beautifully simple – buy where you can afford and rent where you want to live.
Younger buyers often adopt this approach, frustrated that the inner-city and beachside suburbs that offer the lifestyle they seek have been priced beyond their immediate reach.
But it can also be smart to think further ahead by buying and then renting a family home in the suburbs, getting set up for the future.
Rent-vesting is a long-term strategy. Solid capital gains can take years to realise, although national property values rose 21% last year – a record that is unlikely to be immediately repeated..
Here are some ideas around rent-vesting to inspire your thinking about how you can break into the property market.
- Choose carefully – Select the style of property and your preferred area carefully. You want the home to achieve strong capital gains, but it must also attract tenants so achieve good rent. An empty property will hurt your cash flow.
- Amenities count – Make sure your target properties have access to good transport, shops and schools as these are often among tenants' most important considerations.
- Expert advice – Ensure you enjoy all the financial and tax benefits of owning a rental property by seeking advice from your accountant or qualified financial adviser.
- Be worry-free – Being a landlord can be stressful when something goes wrong. Consider using a real estate agency's property management team. Fees range from 4-7%, but they'll do the heavy-lifting when problems arise.
- Reserve cash – It's a great idea to have money aside for any one-off repair costs and those times when the property lies empty as one tenant leaves and another moves in.
This article is provided for general information only and does not take into account the specific needs, objectives or circumstances of the reader. Before acting on any information, you should consider whether it is appropriate for your personal circumstances, carry out your own research and seek professional advice.