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Rentvestors

‘Rentvesting’ is a relatively new term that is being used to describe the action of buying property in an affordable area, renting it out to pay the mortgage, while then renting in an area that you would like to actually live in, or that makes more financial sense. Identified as the “most common new buying habit” in LJ Hooker’s The (new) Australian Dream white paper last year, Google Trends have also shown that the term has tripled in search requests.


Types of Rentvestors

There are a couple of types of rentvestors. Young people utilising the strategy and saving for a first home and an increasing number of professionally employed people of any age taking advantage of tax breaks and creating wealth through property investment rather than ownership.

Tommy Lim also comments rentvesting allows numerous clients to remain ‘globally mobile’ – either pursuing valuable work experience or further studies in overseas markets such Hong Kong, London or in the United States.

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Advantages
of Rentvesting

Flexibility

Renting gives the flexibility not to be locked into an owner occupied mortgage. You are free to travel and move around or upsize should the family grow at any time.

Lifestyle

Rentvesting may be less financially straining by investing in a cheaper market, and gaining access to the various tax concessions currently available.

No compromise on location or size

Many first homes are not ‘dream’ homes and are often located where one can afford and further from work, amenities, family and friends. Also to fit a budget, various other features such as number of bedrooms, car spaces, bathrooms may be sacrificed.

Enter the market sooner

Instead of saving and saving to afford where one wants to live, they may be able to continue renting and enter a market elsewhere straight away. History shows that well selected property can quickly outperform average saving abilities.

Potentially better capital growth than local area

The desired suburb to live may not contain the 15 Key Investment Drivers (explained later) and therefore the performance of the property may not produce the equity gain needed if the owner is looking to upsize in the future.

Tax deductions may lead to extra income to assist with rent

In today’s interest and tax environment, there are many investment properties that will produce a positively geared cash flow that may be used to supplement personal rental expenses.

Reclaim ‘dead’ rent money

If you are renting and not investing, then your rent money is not working for you in any way. Investing in a property and receiving rent from a tenant will offset this ‘dead’ rent money and also provide some capital appreciation.


Disadvantages
of Rentvesting

At the mercy of a landlord

If the landlord decides to sell then you may be forced to move.

Can’t make alterations or renovations to your home

As you don’t own the property it may be harder to alter the dwelling to your taste or requirements.

Capital gains tax if sell

Currently if you sell an investment property there will be capital gains tax to pay on any profit (a 50% discount may apply on property held longer than 12 months). Owner occupied homes are exempt from any capital gains tax.


9-Step Purchase Process

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We can help

At Sound Property we use 15 Key Investment Drivers as a preliminary guide

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Client Success Stories

Excellent service and thorough analysis to suit our needs. Sound Property has been amazing throughout the process of researching postcodes for us, and recommending a property.

David L.

Had a great interaction with Sound Property. Really switched on people that did whatever it took to get a great result on behalf of their buyers. Daniel and his team were a delight to work with.

Paula B

Sound Property helped me to secure a property for my SMSF. I needed secure income with growth at a lower price point. They knocked back properties they didn't think would be good value for me and negotiated a good deal on one they did think would be a good fit for me. I would highly recommend!!

Brian B

Incredible service - so happy with Andrew Cull and all the team at Sound Property. Couldn't have asked for a better experience. Throughly recommended.

Danielle L
1,085 m²
Land size
Case Study

Aspley

House
4
3
4
Investor Brief

Landbank with future subdivision potential

Investment Details
  • Purchase Price: $1,370,000
  • Rented prior to settlement: $900 /w or 3.5% yield
  • 1,085 sqm block
  • Potential to subdivide into 2 x 542sqm
Key Investment Drivers
  • Long-Term Growth: over 8% p.a
  • Rental Increase (12 Months): +10.1%
  • Vacancy Rates: 0.7%
What we liked

Huge block of land with the ability to subdivide into two well-sized building blocks.

21.2%
Compound growth rate (p.a)
Case Study

Craigieburn

House
4
2
2
Investor Brief

Diversify NSW + QLD portfolio with a low maintenance investment

Investment Details
  • Purchased $735,000 in 2021
  • Current value $850,000 in 2022
  • Capital gain $115,000
  • Compound growth rate (p.a) 21.2%
  • Rented $450/w or 3.2% yield
  • Large 700 sqm block
Key Investment Drivers
  • Vacancy Rates – low at 1.2%
  • Popular School catchment
  • Short drive to University, Hospital and beaches
What we liked

A proven performing suburb with a long-term growth rate of 8.36% p.a

4.7%
gross yield
Case Study

Lawnton

House
3
1
1
Investor Brief

Affordable investment property with high yield to help offset mortgage repayments

Investment Details
  • Secured - $595,000
  • Existing tenants paying - $540/w or 4.72% yield
  • Rental Appraisal - $550/w
  • 600sqm block
  • Stable long-term investment producing a strong yield
Key Investment Drivers
  • Long-term Suburb growth: 9.13%
  • Vacancy rates: 0.9%
  • Gross yield: 4.7%
What we liked

Great result for a client that's used the strategy of 'equity in their home for investment'. A property so clean there were no items to be rectified after the building and pest inspection!

0.6%
Vacancy Rates
Case Study

Bald Hills

House
5
3
2
Investor Brief

Landbank opportunity with development potential in future

Investment Details
  • Secured: Off-market $1.068m
  • Large 5 Bed | 3 Bath | 2 Car + Pool
  • 1,500 sqm with 43m frontage (3 x 500sqm lots post subdivision)
  • Over $300,000 in instant gross profit if subdivided
  • Rented with long-term tenants $685/w
  • Walk to the train station and School
Key Investment Drivers
  • Long-term Suburb Growth – 9.15% p.a
  • Vacancy Rates – 0.6%
  • Days on Market - 12 days
What we liked

Rare and affordable 3-lot infill subdivision only 20km to Brisbane CBD.

8.8%
Compound growth
rate (p.a)
Case Study

Leichhardt

House
3
2
Investor Brief

Inner city house for investment and relocation

Investment Details
  • Purchased $1,533,000 in 2019
  • Current value $1,900,00 in 2022
  • Capital gain $367,000
  • Compound growth rate (p.a) 8.8%
  • Rented $1,000/w or 3.4% yield
Key Investment Drivers
  • Long-term suburb growth 8.25% p.a
  • Only 6km to CBD
  • Short drive to University, Hospital and CBD
What we liked

Recently renovated and super convenient location

9.2%
p.a Compound Growth
Case Study

Buderim

House
4
2
2
Investor Brief

Low risk, blue chip, buy and hold house and land in desirable community

Investment Details
  • Purchased $705,000 in 2017
  • Current value $1,500,000 in 2024
  • Capital gain $795,000
  • Compound growth rate (p.a) 9.2%
  • Rented $710/w or 5.2% yield
  • Large 700sqm block
Key Investment Drivers
  • Vacancy Rates – Super low at 0.4%
  • Popular School catchment
  • Short drive to University, Hospital and beaches
What we liked

A blue ribbon, affluent demographic on the Sunshine Coast. Extremely tight vacancy rates, strong rentals and booming infrastructure projects make this a solid buy and hold.

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Level 35 Tower One, Barangaroo

5.0 91 reviews

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42 Brisbane Avenue, Camp Hill 29

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