Inner City Taste for Investors on an Outskirts Budget

It’s true! Changing your mindset could be the key to achieving the lifestyle you want on the budget you just simply don’t have.

Investment Director of Wealthi, Stephanie Davies believes being aspirational in property is exactly what millennials need to do to live in the suburbs they dream of.

Living where you like and investing elsewhere is the perfect strategy for not only millennials but forward thinking Australians too – we call this rent-vesting.

Rent-vesting is an ideal strategy for those who want to build wealth, but like to keep their living arrangements fluid around career, relationships or growing families. By building wealth through a rentvesting strategy, you’ll be not only able to afford a property in the Nation’s outer middle ring suburbs, but the dreamy, expensive inner city ones too.

Thanks to the pandemic (and some long-standing Government initiatives) the new incentives and stimulus extensions are the talk of the town. Savvy Aussies can more easily afford to buy in the investment and younger areas.

Related article: Should I rentvest or buy a family home? 

For example, let’s take the Builders Grant (different in every State and Territory).

First home buyers and first time investors that once thought a home was unachievable in capital cities under $1.5mil with land, are finding that with some help from the government and a few short-term lifestyle sacrifices – they can get into a house/land package in no time.

Whilst incentives and grants are typically for homeowners, investors can live in there and relocate a few years later. This is still worth it as an investment.

House and land investments can be complex if not managed correctly. There are many pieces to the puzzle that can fall out and make the end financial outcomes unattainable. This is why it is important to focus on quality and design focused builds so that we secure the long-term viability of the investment.

Essentially, a mindset change is the driving force for getting this right.

Not only is living where you love and investing where you can afford a dream situation for many, it’s also practical.

Related article: Is now the right time to purchase an investment property?

By rentvesting, you’re expanding your financial horizons and don’t forget how much easier it is to upgrade your rental property when the time is right than upgrading your home.

It’s simply faster and cheaper to upgrade a rental property instead of buying and selling.

The strategy is perfect for those who are running fluid lives and desire to be flexible within their career and budget restraints. It essentially allows you to set and forget about your investments and get them paying for themselves.

In turn, you can feel free to move around and live wherever you like, within the available means, of course.

Our top tips for rentvesting:

1. Step out of your situation and have a birds eye view on where you are putting your cash; is your money in a high-growth, well performing market that you are happy with?
2. Can you live/rent comfortably for equal to or less than the cost to buy in that market?
3. Will this allow you to buy in a high-growth market, and is that something you want to do?
4. Have you thought about the money you will save each time you buy/sell (stamp duty, capital gains tax, agent fees etc)
5. Dream up your ideal living situation; commute time, location, lifestyle, neighbourhood and budget — then try to make it happen
6. Write down all the pros and cons and concerns – and speak to a financial advisor to work out the cash flow scenarios for your situation,
7. Rent-vesting isn’t for everyone but it can be ideal for those who are living in expensive capital cities or abroad.

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