Renting definitely has its perks, but for some, the yearning for something more cannot be easily ignored. If you are one of those ‘think outside the square’ types, then you may have decided rentvesting is a good solution for your needs. Rentvesting allows you to get yourself into the property market by buying in an affordable area, while still enjoying the lifestyle you’ve become accustomed to, through renting and living in the location you prefer.
Choosing the right location to buy your ‘rentvestment’ property, can be challenging; because you won’t be living there, the usual drivers for choosing a property (such as your own needs or desires) are irrelevant. This can be a good thing as it means your will choice will be motivated purely by investment potential and not by how fun it will be to live near those hipster cafes.
Your personal preferences don’t matter when it comes to the location of your property, but its location will be important to prospective tenants, so choose wisely. Buying the property is only half the achievement - you have to be certain you can always tenant it, and that rental yields in the area will be significant enough to continue to cover your costs into the future. The priority for your investment in the early years is that it will not only cover the mortgage with the incoming rent, but also some (or all) of the expenses and maybe even a portion of your own rent.
The ideal investment property will be within a 1-hour commute from the city and close to outer suburban hubs such as Parramatta or Chatswood in Sydney, and Werribee or Chadstone in Melbourne. Choosing your suburb well, and buying a property that is really well suited to the rental market, with good access to local facilities, shops, schools and so on, gives you a much better chance of finding the right kind of tenants. If large amounts of money are being poured into local infrastructure, then you can be sure the value of your property will grow over the lifetime of your investment. Good accessibility to major public transport and freeways is also an essential consideration.
If you have decided to rentvest, and managed to narrow your locations down to a few options, get in touch with real estate agents in those areas and get advice. They will know better than any research you can do, what is happening with property sales in the area and what the rental market opportunities are. They may advise you to choose one suburb over for example, or offer you a hot tip for a property about to hit the market. Once you have purchased the property, find a property manager who’ll take care of your investment for you. A good property manager can advise you on things like how much rent to charge, or what to include in the lease agreement. They can also liaise with tenants on your behalf and keep track of how the property is being maintained. You should also get a financial advisor who can help you navigate the tax advantages available to you as an investment property owner.