Rentvesting: The Secret to Getting into the Property Market
A long-term renter and happy about it. Have you discovered the secret investing back door – Rentvesting?
There’s nothing more frustrating than to build a dream of owning your own home, get excited when you find a property you fell in love with, only to have your finance specialist utter those heartbreaking words – ‘You can’t afford it!’
Many are left feeling deflated and resigned to renting for the rest of their lives.
However, many others determined to get into the property market are not accepting no for an answer and have discovered a so-called secret back-door to getting into the property market.
It’s called Rentvesting.
Rentvesting is a scenario whereby you remain renting your place of residence and purchase an investment property instead.
Whilst this is not necessarily a solution for everyone, depending on your circumstances, this could be just the ticket you need to get into the property market sooner.
I’m not going to go through all the pros and cons of rentvesting in this article. You can find plenty of articles on this topic if you deem it one worthy of further research. You might also like to add some of your favourite Pro’s or Con’s in the comment below – I welcome your input and experiences. My intention is to introduce this concept to those who desperately want to own their home and have been turned away due to lack of finance affordability. In some cases, by literally a bee’s whisker! If you’re at a loss as to how you could ever own your own home, this could be the answer.
The Advantages of Rentvesting
Let’s look at a few reasons this could be for you…
It could get you into the market sooner. Maybe you have a decent deposit saved up yet, your finance specialist has said you still can’t afford your dream home. By re-jigging the numbers, you could remain renting and purchase a lower priced property receiving healthy rent. This could make all the difference to go from a decline to a bright green approval.
Live where you want to, in the nicest suburbs. Ok, so maybe the dream home is a bit out of your reach for now. Maybe you need to live close to the City for work and travel reasons. This enables you to be figuratively ‘living beyond your means’ without the price-tag. Still try to keep the costs down, you don’t want to over-commit yourself.
Live and purchase in two different States. Depending on your life-style choices, you might need to live in one State for work purposes but want to buy in another State, maybe because that’s where your family are and where you want to end up in the future or vice versa. Purchase prices and rents are vastly different in each State and in different regions. This can enable you to map out the perfect plan for your current and future situations.
Chase the higher rental yields. When buying an investment property many will tell you to buy without emotion and look at the numbers – you may never ever live there. If you’re happy living in the right suburb whilst renting, now you’re not limited to where you might buy as an investor. Your property expert will be more than excited to show you where the best rental returns are happening on their stock lists. By achieving top rental income, this could push your affordability over the line and start you on your journey as a property owner.
Property investors receive tax benefits. Now that you’re an investor, you are eligible for tax benefits such as depreciation, deductible interest, investment property expense deductions on your tax return. Make sure you engage an excellent accountant (if you haven’t already) so they can set you up to maximise your benefits – the difference can be thousands of dollars each year.
Drowning is the most common cause of traumatic death in children aged under five years in Queensland. Approximately five toddlers drown in Queensland swimming pools every year. Almost all swimming pool drownings are preventable.
As the temperature increases, so too does the need to find a cool spot in which to relax and escape the heat, especially for children.
Many parents look to small inflatable pools for this relief but there are several issues parents should be aware of before buying these pools. Unfortunately, every year at Christmas time, a number of lives are lost around Australia due to children drowning in small pools. Sometimes, people just aren’t aware that it only takes a small amount of water for a child to drown.
Portable pools and spas can pose a serious safety risk to young children. A number of child drownings in recent years have occurred in portable pools and spas. It is therefore important to consider the safety of young children around these pools.
If your portable pool or spa can hold more than 300 millimetres of water, has a volume of more than 2,000 litres or has a filtration system, the new laws apply to you. You will need to:
Obtain a certificate from a licensed building certifier stating that your pool complies with the pool safety standard, before filling the pool or spa with more than 300 millimetres of water.
Obtain a building approval.
Register your pool or spa.
If you are selling, buying or leasing your property with a pool or SPA, a safety certificate is required from a licensed pool safety inspector. Alternatively, the portable pool or spa can be removed.
Exclusions From the New Laws
Queensland’s pool safety laws do not apply to portable pools or spas that:
Cannot be filled with more than 300 millimetres of water.
Have a maximum volume of 2,000 litres.
Have no filtration system.
All three criteria above must be met to be excluded. Many models of portable pools sold at department stores and pool shops meet these criteria, but you should check before buying.
Morayfield – half way to the Sunshine Coast (a 1 hour drive from Wishart H.O.)
A big welcome to Shame and Pam Kelly from Narrabri NSW, who were referred to ARRIVE to manage their property in Morayfield, a 60-minute drive from Wishart HO. Rented for listed rental price within 7 days!
‘We would follow the ARRIVE team anywhere, regardless of where our property was located. We tried other local agents and they just didn’t do what they said they would do. We were a little skeptical at first about the distance, but Arrive proved that location no longer has any bearing. They rented our property within 7 days at a higher rent than the other agents had previously gotten us’. A big thanks to Karen and her team.
Long gone are the days where tenants walk into an Agency and ask for a Rental List, nor do they pay rent by cash and we continue to prove this time and time again for our owners.
At ARRIVE, we promote your home on the most prominent international and local accommodation websites. Our sophisticated contact management software enables us to effectively communicate with current and prospective residents looking for unique accommodation, either locally or overseas.
So, when it comes to showcasing a property, we will transport your home beyond geographical boundaries.
5 Top New Year’s Resolutions for Investment Property Owners
Treat it like a business
If you want to get the best possible returns on your investment, then you need to start treating like a business and not a hobby. Some tips below on how to become a business owner of your investment:
ATTEND THE PROPERTY
Best decisions can be made after eyeballing a property. While your property manager will usually send you photos and a report, there is nothing like being present and seeing firsthand the state of your property.
BUDGET FOR IMPROVEMENTS
Too many owner investors, don’t budget for maintenance let alone improvements to their property. Every business needs investment made into maintaining and future improvements
As any business, you need to know your worth. Get an annual Rental and Sales appraisal each year to keep track of how much your investment property is worth.
REVIEW OF FINANCING
You should review your loans at least once a year. If your broker or lender is not giving you the best possible interest rate, then it might be time to consider re financing.
You should also review your tax planning with your accountant twice yearly. Once at the beginning of the financial year, then halfway through. This allows you to plan and allow for any changes in your financial circumstances