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The rise of the rentvestor

In the past, owning a home has been an Australian rite of passage. But let’s face it – for most first time buyers the days of a quarter acre block are long gone. Even with record house prices, real estate still remains one of the most of the popular and reliable investments for most Australians.

So how do first home buyers get into the property market? Enter rentvesting. The concept is simple, invest where you can afford and rent where you want to live. More and more first home buyers are choosing to utilise the generous tax advantages available to investors, while renting in areas they couldn’t normally afford to purchase.

Build wealth without compromising your lifestyle

By finding the happy medium between lifestyle and affordability, savvy rentvestors are using a combination of tax rebates and rental income to pay for their investment properties. In this current environment of record low-interest rates, many rentvestors are finding that their properties are cash flow neutral or even cash positive after tax.

An easier way to get on the property ladder

In cities like Sydney where the average house price can be north of $1,000,000, the minimum upfront deposit required can be a major hurdle for many first home buyers. Assuming a $1,000,000 purchase price, a purchaser would require around $140,000 to cover a 10% deposit and stamp duty charges. As rentvestors have access to more affordable options Australia wide, a property of $400,000 can be purchased with as little as a $60,000 deposit.

How to achieve success with rentvesting

With many rentvestors buying property outside of their local area, it’s important that a thorough selection criteria is identified and followed. Understanding the key drivers of a local market can often involve extensive research, something more and more rentvestors are looking to outsource. Any good property strategy should take into account factors such as employment diversity, understanding future supply and demand, identifying key lifestyle drivers and a thorough knowledge of the specific properties dimensions and finishings.

Michael and Brooke’s experience

Meet Michael and Brooke, Binnari Property clients from Darlinghurst in Sydney. Five years ago this couple in their late twenties knew that purchasing a property in their local suburb was out of reach. They were planning to start a family and wanted to ensure any investment would have a minimal impact on their cash flow. After reviewing several options, the couple opted to purchase a four bedroom house in Newcastle for $400,000. They were attracted to Newcastle’s diverse and sustainable job market, the natural beauty of the coastline and the proposed changes to regenerate the city centre. They could picture themselves living there and felt comfortable that a young family would be a sustainable tenant. In collaboration with Binnari Property, Michael and Brooke developed a cash flow positive property investment strategy that that suited their lifestyles. Having since welcomed their first child, they are now looking to utilise the growth in their investment property to finance their Sydney home deposit.