Property has been considered a popular path to wealth for Australians for many years. Buying your own home is often the first significant investment you will make. Purchasing another property may well be the second – even before shares and other assets.
Your first investment in property, however, need not be your home. Buying an investment property can be a good way to get your foot on the property ladder while you are renting or still living at home. It’s called ‘Rentvesting’.
Many people feel locked out of the housing market as the areas they want to live in become increasingly unaffordable. Rentvesting is an alternative way to get started. Rent in a suburb that suits your lifestyle, and purchase an investment property that fits your budget.
Rentvesting therefore is a strategy that saves people from becoming renters their entire life. It gives struggling first home buyers an opportunity to enter the market, even if it’s not as their first home.
Sensible investments in property have many benefits. Property can be less volatile than shares and it tends to be regarded as a safe haven when other assets are declining in value.
Property has the potential to generate capital growth (an increase in the value of your asset) as well as rental income. There are also tax advantages associated with owning an investment property.
Buying real estate, whether you are buying the family home or an investment, is one of life’s most important financial decisions. However, when buying an investment property, it is wise to remember that you are making a business decision. You are not buying from the heart, but from the head. You are buying the property because you expect it to appreciate in value and give you a financial return.