Recent years have seen more and more first homebuyers choosing to buy an investment property as their first home.
So why are they doing it? What are the benefits of renting out rather than living in their first home?
Some feel it gives them the best chance of getting a foothold in today’s market without having to give up on their lifestyle. And, of course, it’s a no brainer for those who stay at home with their parents while reaping the benefits of their investment.
Many who choose to start with an investment property don’t want to have to make compromises or cuts to their chosen lifestyle in order to meet their mortgage obligations. By deciding not to live in their homes they can use the rental on their properties to service their loans and can also benefit from some tax deductions.
So how do you go about getting the right rental property? There are a number of issues to be considered, depending on your own wants. Don’t rely on what your Uncle Ted or neighbour tells you. Talk to the experts – people who know what tenants want and have experience in identifying properties with the potential for capital growth. It could save you big bucks. Take the emotion out of looking for a property and start to think like a tenant. Try to ensure that your investment property will be attractive to good tenants, even if it doesn’t appeal to you. If you do it right and your property has good prospects for capital growth, you could create a springboard into a better home – a home you would want to live in.
Right now there is a related first home buyer strategy called Rentvesting which is gaining in popularity in Australia. Rentvestors buy an investment property in an area they can afford and then rent a home to live in which is often located in a more pricey area close to where they live or work.
So, what are the benefits of Rentvesting? The main benefit is that it enables you to buy your first property a lot sooner. The sooner you get in the sooner you’ll be in line to generate capital gains and start building wealth. It’s an ideal option if you may have to move around a lot.
As with any investment decision it’s important to get as much information as you can to help you determine if a particular investment fits your needs and dreams. Talk to one of our team members at Nicheliving to find out if this is for you.