As a first home buyer, it’s never been more challenging to secure your first property.
Consider this; prices in Sydney have risen by a whopping 6,556% since the 1960s – and there’s no doubt that average salaries have not risen by anywhere near that amount!
Getting your foot onto the bottom rung of the property ladder is much harder than when your parents started out. And as we know, property investment is the key driver of long-term wealth creation.
Perhaps it’s time to consider other strategies. Perhaps you should consider “rentvesting”.
“Rentvesting” is an increasingly popular way for those who are new to real estate to begin building a property investment portfolio. As a young person, often single and without dependent children, this strategy could suit your lifestyle and at the same time help you build a prosperous financial future.
The basics are pretty simple. Rather than struggling to save a deposit for your own home, and then spending years struggling to meet mortgage repayments with little or no tax incentives, “rentvesting” offers you both flexibility and the benefits of negative gearing.
For many young people, the area in Sydney where you wish to live, close to work, friends and your social life, may not be the same area where you can afford to buy.
However, as a “rentvester”, you can continue to rent in the area that suits your lifestyle. At the same time, rather than saving to buy a home for you to live in, you would save to buy an investment property.
Often, investment properties are smaller than the homes we need to live in. This gives you the added benefit of needing to save a smaller deposit.
By putting your savings into an investment property sooner, you will benefit from longer-term property price rises. Most importantly, you can negatively gear the property for a significant reduction in your tax liabilities.
Increasing numbers of first home buyers are looking to “rentvesting” as a manageable way to begin investing in property. Surveys suggest that up to one-third of property investors are actually “rentvesting”!
It is becoming so popular, that some “rentvesters” purchase multiple investment apartments. This strategy can offer peace of mind. Should interest rates rise and servicing the loans become too challenging, you have the ability to sell one investment while retaining the others, and you’re spared the need to move home.
The key to deciding whether this strategy will work for you is to do your homework. You need to consider:
- Your income levels
- The cost of paying rent where you’ll live
- The income you’ll receive from your investment property
- The mortgage and other expenses on your investment property
Remember – any out of pocket expenses on your investment property can be a tax deduction too – which can definitely make this strategy worthwhile.
If the sums add up, this is a great way for you to start investing sooner and begin building your property portfolio!
For a wide selection of potential investments with excellent long-term growth prospects, speak to Devine Real Estate – the foremost real estate experts in Sydney’s Inner West!
Devine Real Estate
T: 02 8789 0217 | M: 0419 202 930