Owning your own home is considered to be a large part of the Australian dream, however as property prices across the country have increased, it has become challenging to enter the property market, let alone purchase in the area where you really want to live. And so was born the practice of ‘Rent-vesting’: a home-owning strategy that allows you to live in the location and have the lifestyle you want through renting a property, while purchasing an investment property perhaps in a different location that suits your budget.
While it may seem counter-intuitive at first to rent and own at the same time, it can be an opportunity to have the best of both worlds; live where you want and get your foot into the market - dependent on your budget, life stage, and desired lifestyle of course.
If your investment property is earning you a profit, you may even be able to use some of this income to subsidise your rent.
What are the pros of rent-vesting:
- -You get to live where you want
- -Potential to enter the property market sooner
- -Home maintenance costs at your rented home are likely to be low
- -Potential tax benefits
- -Rental income
- -Potential capital
What are some of the cons of rent-vesting?
- -Your primary residence will be less secure
- -Ongoing home ownership costs
- -Capital gains tax liability
- -No access to first home-owners grant
- -Potential capital loss
Thinking of investing in property? Speaking to your financier and a real estate agent is a great place to start. With the right guidance, you could be on your way to living the life you want while securing your future.