Rent Vesting

Our long held and much loved Australian Dream – to start a family, buy a house and settle down in the suburbs – may be a thing of the past. These days our Gen Y buyers want to live in a nice house or apartment close to amenities and lifestyle hotspots. These tend to be areas in high demand where property prices are outside the reach of first homebuyers. They know the longer they wait to get into the property market the harder it may become, but what can they do?

Here enters the concept of rent investing or ‘rent-vesting’, which involves purchasing an investment property in a more affordable area while continuing to rent in the luxury area you wish to live.

Some advantages of rent-vesting are:
 A lower cost property may require a lower deposit that can be saved in much less time
 Expenses and loan interest are tax deductible for investment properties but not for your home residence
 Renting is often cheaper on a cash-flow basis because mortgage rates plus property expenses tend to be higher than rent
 Buying and and selling a house involves a lot of transaction costs so if you are planning on moving to a different area in the next few years rent-vesting may be a good option

Rent-vesting is not for everyone, but it is a viable option that some people are using to get ahead in the property market. If you would like more information contact us at Propertunity.

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