Does the cost of owning a home get you tense?
For Boomers, the dream was owning their own home. For Millenials and Gen Z, the cost of housing is astronomical, and their future will likely include reinvesting.
In 2018, a third of Australians between the ages of 25-34 owned property. Over half were due to reinvesting properties or vacation homes. We’ll look at generational as well as housing market trends that have influenced up-and-coming homeowners to take this alternative route.
Keep reading and find out what makes rentvesting so attractive!
Low-Incomes Force Individuals to Think Outside the Box
The first major factor to discuss is your lifestyle. Young people can either buy property, sacrificing their lifestyle, or rent a property and continue all the things they love doing with their wallets in-tact.
Buying a home in a desirable area is not possible for someone with a starting salary or anyone who isn’t in a senior position at a company. Why kick yourself with a mortgage you can’t support when you can rent for cheap?
Buying property in affordable areas to sell to others grows your equity at a fraction of the cost it requires to buy a home. This aids future homeowners down the road, as their accumulated equity will help them purchase a property if they ever decide to do so.
Change in Ideologies
Owning a home still means a lot to people. It’s a point of pride for many individuals to have land; It shows that you’ve worked hard and invested in your savings. However, it’s no longer an embarrassment to admit that you rent.
Nowadays, admitting you’re rentvesting is positive, and for good reason! People understand that you chose a hip area with nightlife or a scenic area in lieu of a property with your name stamped on it.
It’s understood in this generation that rentvesting strategy is about playing the long-game on the market. You’re growing your portfolio with newly acquired properties and saving precious income.
Pay a Fraction of the Cost
Moving away from ideologies and lifestyle, the bottom line that supports rentvesting for first home buyers is the “discount.” If you buy in an up-and-coming area, costs will continue to go up, and the properties you rent out will increase in value! You lose in rentvesting when the property value dramatically decreases, but if you plan smart, this is an unlikely scenario.
You can even hire a broker to help you make smart decisions while rentvesting. Building a relationship with a broker will allow you to take out loans and acquire new properties under your belt that will expand your portfolio.
Getting access to a rentvesting calculator will help you decide whether it’s better to rent or buy for your budget. The big idea to remember is to buy what you can afford and rent where you want to be!
The costs of maintenance and improvements to your investment properties are tax-deductible. The deductions will cover or balance out the cost of mortgage repayments. This is a huge help in maintaining the properties in your new portfolio!
Start Rentvesting and Build Your Portfolio
In this difficult job market, rentvesting has become the saving grace for new homeowners looking for a combination of equity growth, lifestyle maintenance, and income stability.
Rentvesting isn’t without flaws, as many see renting as dead money. But it can be a huge boon to your future if maintained properly! Read more articles from our blog today to get the jump on upcoming trends in business and personal finances.
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