We recently held a conference on an investment strategy known as Rentvesting. We had an excellent reaction to the content, so we thought that we’d pass on some of the knowledge to our investors! You’ll find below a guide and brief overview of what Rentvesting is all about.
At McCarthy Money we want to make a real difference to Australians’ financial futures. Whether it be securing lower interest rates, getting more deductions on tax work, or investing in a property, our goal is always centered around the individual. How can we improve your financial situation?
To that end we recently came across an investment strategy which has the potential to make investment in property much more affordable for everybody, and we pounced at the opportunity to spread the word to potential investors. That technique is called Rentvesting and involves moving away from a traditional process towards property, into something a bit more innovative.
Traditionally, somebody looking to purchase their first property wants to look at a property they can live in. Nobody wants to pay rent forever, and owning the property you live in is the first step to achieving that. But when you think about the cost of living on top of loan repayments, how are you meant to make any savings? How are you even meant to keep up with all of the loan repayments at all?
Rentvesting changes the amount of money you have coming in at any given time. With an owner occupied home your only source of incoming cash is the money you make from your job. Rentvesting instead brings in cash from a number of different sources. If you own a home that you don’t live in and rent it out as an investment property, you get income from rent and tax benefits as well as your standard income.
If you do the math for the cash flows of an investment property in comparison to an owner occupied home, you can clearly see just how much money you can be saving per week. Check out the examples below to see how Rentvesting can take your finances to the next level!
Now, as we said earlier, Rentvesting changes the amount of money you have coming in at any given time. Here’s what Rentvesting would look like on that same property just doing it in a different way.
These examples of how Rentvesting works for you, show just how simple the principles are. Own a property and rent it out, use the rent money and tax benefits to rent yourself, and service the loan with which you purchased the investment. From there, keep servicing the loan until you are at a point where the property’s equity can be used to repeat the process and continue expansion of your asset base!
If you would like to hear the full story of Rentvesting, let us know that you’re interested by leaving a comment below. Whilst we haven’t set a date for the next conference, we would be happy to discuss this further with you – just drop us a line and we’ll set something up for all our clients on the topic of Rentvesting.