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What is Rent-vesting?

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What Is Rent-vesting? It Could Be Your Next Property Move

Many people are feeling locked out of the housing market as prices in the areas they want to live become increasingly unaffordable. However, sometimes the best way to approach something is from the side, rather than from the front.

More and more young couples and families are figuring out that the key to achieving their dream of owning property is to take an alternative approach - rent where you actually want to live, and buy where it is most affordable and then rent out that property. The latest figures show that in the last few years, the percentage of homebuyers that are first time buyers has more than doubled, showing that young Aussies are more determined than ever to secure a property.

Investing before purchasing your own home may seem like a backwards approach, but it can be the smartest way to gain property ownership in the current economic climate.


Why are Aussies Rent-vesting?

There are several advantages to taking the so-called ‘rent-vesting’ route, the primary one being that you can enter the property market sooner and start building wealth as an investor.

Because the property is cheaper, the deposit needed may be lower (but obviously you would need to check with your lender) and you thus don’t have to spend years saving, which can only be a good thing. A large amount of potential home owners get caught in the trap of renting and being unable to afford a deposit for a home of their own, so by lowering the deposit goal, more people would be able to reach their savings goal while they are renting.

Buying an investment property first also means you don’t have to compromise on location and price when buying, as you don’t have to buy within your ideal area. The focus is solely on affordability and the value of the property as an investment that can help you save for the property you really want.

The key drawcard for Aussie homebuyers is the fact they don’t have to sacrifice the lifestyle they want in order to work towards buying their dream home – they can live near the city or beach or the good social amenities while using this investment property to save.

If it is an option for you, buying several cheaper investment properties can potentially be a way to build wealth quicker than buying one more expensive home.


The Game Plan

Increasing numbers of first homebuyers are strategically building property portfolios in order to get where they want to be - some are even only waiting a few months before reassessing, selling and reinvesting!

If researched and planned with care, rent-vesting can be a great way to break through the affordability barrier. But it might be a good idea to consider these things before investing:

This Page Was Written by Barry Wilkinson

Barry Wilkinson from homeloans.com.au provides Australians with low rates and flexible, convenient solutions, combined with personal service.

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