As property prices continue to rise, purchasing in a centrally-located or sought-after area is out of reach for the average working millennial. Instead, many are opting to rent rather than buy as it means not having to compromise their inner city or beachside lifestyle. But for those who are still eager to enter the market, there is a way to get the best of both worlds.
‘Rentvesting’ is the term coined for when you purchase a property for investment purposes in an affordable location and continue to live and rent in the area of your choice.
“Millennials aren’t interested in purchasing a property in the outer suburbs and then having to commute into the CBD,” says Mark Grange - Liberty Financial Adviser. “Rentvesting allows you to enter the property market at a more affordable cost with the view to buying your owner occupied in an area you prefer to live once you have built up enough equity.”
Where to buy depends on your circumstances, if you don’t have much spare at the end of each month you look for properties with high yield e.g. high rent compared to the value of the property. If you are prepared to chip in a few $$ each month you may look to properties with a potential for higher capital growth e.g. in highly sought after area with increasing property prices above the market. Or you can settle some where in the middle.
“It’s all about living within your means. Don’t overstretch at the start while you’re building it up”.
To ensure you have the means to make ‘Rentvesting’ work for you, contact Mark Grange Liberty Adviser for advice on good debt and other strategies that will allow you to maintain your current lifestyle.