A new type of property owner is flooding the market.

So, what is a Rentvestor?

In simple terms, a Rentvestor is a property investor who generally chooses to buy outside of the suburb where they live (but sometimes even within the same suburb). Instead of relocating, they rent out the property they own and then rent an apartment or home to live in, in their desired area. Rentvesting is a growing trend with first home buyers. It allows them to remain at home with lower living costs when they take that first step onto the property ladder.

Rentvesting was identified as a key trend by LJ Hooker for the so called ‘millennials’, who are looking to take advantage of low interest rates but find themselves unable to afford property in the suburbs that are close to where they want to work and live. However this term can also apply to families who want a larger home to live in but can’t afford to buy one. Even older couples who can’t afford their dream location may choose to rentvest as a way to have their cake and eat it too.

Some rentvestors purchase with a view to moving into their property one day. Others see it as a way to leverage themselves into future property purchases in the area they would like to live in.

The rise of the rentvestor can create a win/win situation for the property market. Owners in pricier areas are able to find tenants, while those looking to get or keep a foot on the property ladder still have affordable options. Investors purchasing lower cost homes in suburban or regional areas also means that these markets don’t flatten out – a bonus for those who wish to make money from property investment.

If you are thinking of becoming a rentvestor, it is still important to take all the relevant figures into account with the help of your local lending specialist. These figures include the cost of council and water rates as well as strata fees if your investment property is in an apartment block. Then there is landlord’s insurance and the cost of a real estate agent to manage your property to take into consideration.

As a rentvestor, you can expect to lease your property and have your tenants contribute to the cost of your mortgage. However, when planning your finances you do need to accommodate the possibility of gaps between tenants and make sure you are able to make your repayments independently.

Some rentvestors are able to take advantage of the tax breaks involved with becoming a landlord. Talk to your Property Lending Specialist to find out if this method of purchasing property is right for you.