Rentvesting and first home buyers
“Hello and welcome back to daily buying tips, I’m Dean Berman from Berman Buys.
Today were going to talk about why ‘rentvesting’ can help first home buyers.
For those who have never heard of the term rentvesting.
Don’t be alarmed.
It simply means you continue to rent, while you invest in property.
You may think how is that even possible?
How can you afford to pay rent and a mortgage at the same time?
It is actually possible.
This strategy is ideally suited for those renting in prime locations, but can’t afford to buy in that same location.
So instead of waiting 5 or 10 years to buy.
You start to build a portfolio in the meantime, whilst you continue to rent where you like.
I’ll give some brief numbers for simple understanding.
Let’s say you pay $400 per week in rent.
Assuming no vacancy, an investment property costing $500,000 will likely cost you about $100-$150 per week to hold.
Therefore you would need a minimum of $500-$550 per week to rent and invest.
This doesn’t take into account living expenses such as food, travel etc…
On top of that you would need the deposit (usually 10-20% of the purchase price) and stamp duty to purchase the investment.
One of the key benefits of this idea is you buy in locations which will likely outperform where you live.
At the same time you diversify your future investments, taking advantage of differing growth cycles.
Then when your ready to purchase your own place to live in.
You can either sell some or all of the investments.
Or hold onto them and borrow against their value.
Either way, it maybe a great idea for those wanting to keep your lifestyle, whilst getting onto the property ladder for the first time.”