For new investors or home buyers looking to get into the market, it might well be worth considering rentvesting.
While rentvesting is a relatively new term in the world of real estate, there are a lot of reasons why it might be an effective way to get your property portfolio started and growing faster than you might be able to otherwise.
Rentvesting involves renting a property where you want to live, and investing in a different location. This is different to the traditional approach of buying your PPOR (principal place of residence) first and then investing elsewhere, once you’ve managed to build up some equity and further borrowing capacity.
As a strategy, rentvesting allows you the best of both worlds - living where you want, while still being invested in the market. There are a number of advantages and disadvantages to this approach.
Advantages of rentvesting
Buy sooner
If you’re trying to purchase a house and you live in an expensive location, it can take a long time to try and save up enough of a deposit and you’ll also need the income to service the debt. By rentvesting, you can invest in cheaper locations meaning you can start sooner.