While ‘rentvesting’ won’t suit everyone’s lifestyle, there are situations in which it can help investors who are working towards longer-term financial independence.
“It’s most common for people in their late 20’s and 30’s, but I’ve also helped couples in their 50’s with it,” shares head of property market research and director at Propertyology, Simon Pressley.
“When done well, the locations that ‘rentvestors’ buy property in are chosen for the near-term capital growth potential and not adversely influenced by biases such as where the person lives.”
In fact, Pressley had met with a couple in their 50’s who wanted to set themselves onto a better path to retirement. But while the couple hadn’t dabbled in investments before, they held an advantageous portion of equity in the family home.
“They recognised that a debt-free family home still doesn’t generate income in retirement,” Pressley says. “We worked through the pros and cons of a few strategies with them and they chose to sell their home and to live in a rented trendy apartment in a more central location.”
The profits that were reaped from the sale of the couple’s family home were split up and put toward securing three investment properties that were situated in three entirely different locations across the country.
Meanwhile, the couple were able to live closer to the city and the beach; soaking up the idyllic lifestyle that they had previously only ever dreamed of obtaining.
“The combined growth in capital value from their three investments was superior to the growth of what their former family home would have produced, the impact on their household budget was lower than when they had the home mortgage, and the nice apartment that they were renting enhanced their lifestyle,” Pressley shares of the financial difference that the “lateral-thinking” approach to ‘rentvesting’ made for the couple.
