What is Rentvesting?
So what is Rentvesting? Rentvesting has come about through the fact that housing is getting more and more difficult to buy closer into the city. So we are actually seeing values in those city areas starting to increase beyond what say the average household can buy. Yet that average household still wants to have all the conveniences and lifestyle drivers associated to living close to town. So here’s the concept. Rentvesting is about renting in that location but using the difference between say what it would cost you to own in that location, in other words the mortgage repayments and using that difference between what you are paying in rent versus what you are paying in mortgage and investing the money somewhere else.
So in some cases you’ve got a bricks and mortar investment but you still able to live in the location that you want to live in. You can take that a step further and some couples are also looking at ways to get their children into some of the best school areas. So they are sort of saying rather then again struggling to buy in that location, they may rent there for a short periods such as 12 months to 2 years and get their first child into that school and then potentially move back into their home later on. But in the meantime, also making their money work hard for them by investing. Basically saying that I still want to invest but if I was going to lock all my money away into a significant asset, then my money is only my after tax dollars is servicing that mortgage as oppose to getting the money working harder by investing the money into an investment property which has the rental income from the tenant and also potentially some support around some tax benefits and you absolutely controlling that asset and getting those returns. So that’s the concept of rentvesting.