In 2022, many faced with the decision to rent or buy are finding they cannot afford a property in the area where they’d like to live. This is especially true along the east coast of Australia, both in Sydney and on the Central Coast. Thankfully, rentvesting is another option.
Rentvesting successfully
1. Save
The greater your deposit, the less you will need to borrow. This increases your chance of securing finance, decreases interest and can avoid the need for lender’s mortgage insurance.
2. Research
Determine the true market value of the property. Research the history of the neighbouring properties to understand demand in that area, especially those for sale or sold recently. Attend local inspections and auctions, and take your findings to the agent when making your offer.
3. Plan
Rentvesting still isn’t cheap – ensure you take the time to do the maths on your potential returns. The property you purchase should still position you well for the future.
4. Think ahead
Look at locations with longer-term potential. The suburb or street you buy in doesn’t have to be in high-demand right now, but consider the things that will make the area desirable in the future.
5. Consider all costs
The costs of property don’t stop at the time of purchase. There are several ongoing costs associated with property ownership that should be factored into your budget. These include interest payments, property maintenance, council rates, insurance and more. Always keep these in mind before purchasing.
6. Avoid emotional purchases
When buying an investment property, it’s important to remember that this is not your ‘forever home’. Focus on the property’s potential returns (rental yield and capital growth) rather than how it makes you feel.
Other points to consider when rentvesting
When considering rentvesting, there are several other points to consider. These include grants and first home-buyer schemes – rentvesting may affect your eligibility for these. Be sure to do your research.