How to invest in property as a ‘rentvestor’
Are you aged in your mid-30s and haven’t yet bought your own home?
If you answered yet, you’re not alone: research from ING Direct shows the average age of first homebuyers across Australia is now 37.7 years, compared to 34.7 years just a decade ago.
With housing affordability an ongoing struggle for many Gen-Y’s, the solution for growing your wealth and investing in property may come in an unlikely package: ‘rentvesting’.
Reinvesting involves you renting where you want to live, and investing elsewhere in a suburb that is more affordable.
Prolific investor Nathan Birch, co-founder of BInvested, believes this is an ideal way for investors young and old to break into the market.
“You can still purchase properties for $200,000 in Australia, within an hour of a capital city that are positively or neutrally geared, but you need to be willing to look beyond your own backyard,” he says.
While it may have been the norm in in the past to buy one ‘dream house’ to settle down in, he believes that people are becoming more resourceful and turning to strategies like investing with friends and family or rentvesting to get ahead financially.
Birch, who personally owns 200+ properties, believes that would-be property owners need to stop looking for “the perfect house on the perfect street”, and be willing to consider investing in other suburbs – even if those investment locations are interstate or in cities and towns situated hours away from where you personally live.
Birch’s tips for rentvesting:
- Property investing comes down to numbers – emotion needs to be left at the door.
- Always look for properties that are below market value.
- Seek out properties that have high growth potential, rather than properties you’d personally like to call home.
- Aim for an investment that is positive to neutrally geared, especially in the current environment, with negative gearing policies so unstable.