In recent times, the concept of 'rentvesting' has emerged as a savvy solution for those aspiring to climb the property ladder without compromising on their current lifestyle preferences.
Rentvesting involves purchasing a property in an area with promising long-term growth and strong rental yield, while continuing to rent in a more desirable or convenient location for personal reasons.
Why Choose Rentvesting?
Rentvesting is an innovative approach for those who find the property prices in their preferred living area unattainable. It's especially practical for individuals and families prioritising proximity to schools, work, or specific lifestyle amenities. This strategy allows you to build wealth and invest in your future, even if your current living situation involves renting.
By focusing on areas with higher rental yields, you can identify potential growth hotspots that will also have a stronger cashflow and thereby, reduce your holding costs and reduce your out-of-pocket expenses.
This insight is crucial in kickstarting your property investment journey. At Meridian Australia, we specialise in guiding clients through this process, offering detailed market analysis and identifying high-performing investment opportunities.
In order to determine if this strategy is right for you, consulting with your bank/lending provider about borrowing power is essential.
Consider The Challenges
While rentvesting offers numerous advantages, it's important to acknowledge its challenges.
One significant downside is the loss of exemptions typically available for primary residences, such as capital gains tax exemptions. Any profit from selling your investment property is subject to capital gains tax.
As a renter, your long-term residential security is subject to the whims of your landlord, who may decide to undertake renovations or sell the property. This lack of control over your living situation is a trade-off in the rentvesting strategy.
Moreover, inadequate research or poor area selection could lead to additional financial strain, where mortgage payments on your investment may not be fully covered by rental income, coupled with potential rent increases in your current residence. This is why engaging with an appropriately qualified professional such as: a financial advisor or accountant and/or legal provider can be invaluable.
Meridian Australia: Your Partner in Rentvesting
If you're considering entering the property market as a first-time investor or a seasoned rentvestor seeking a new opportunity, Meridian is here to assist you.
Our expertise in property market research, detailed due diligence, and holistic investment approaches ensures that your property investment journey is both strategic and aligned with your long-term financial aspirations.
In addition to our service, we can also facilitate an introduction to an appropriately qualified progressional to determine of this strategy is right for you.
Contact us today to explore your options and take the first step towards successful property investment and wealth creation.