6 Benefits of Rentvesting in the Australasian Property Market

In the ever-evolving world of real estate investment, a strategy gaining traction in Australasia is "rentvesting." This unique approach allows investors to maximise their financial opportunities while maintaining flexibility and control over their housing choices.

What is Rentvesting?
Rentvesting is a property-owning strategy where you rent a house to live in that suits your lifestyle, while owning an investment property that suits your budget. This strategy has become increasingly popular among buyers as property prices in metropolitan areas have increased.

Why Should You Rentvest?
Let’s delve into the benefits of rentvesting for investors looking to buy a house in New Zealand, Australia, and neighbouring regions.

1. Diverse Investment Portfolio
Rentvesting offers investors the opportunity to diversify their property portfolio without the need to compromise their lifestyle choices. By choosing to rent in their preferred location and investing elsewhere, you can spread risk and potentially increase your overall returns.

Diversification in property investment has shown to be a successful strategy, especially in cities like Auckland and Wellington, where property prices can be high.

2. Financial Flexibility
One of the key advantages of rentvesting is the flexibility it provides. Investors can choose to rent in a location that suits their lifestyle and career while directing their capital towards more affordable, high-yield properties in other areas.

This flexibility allows investors to seize opportunities in growing markets or adjust their strategy as economic conditions change. In the fast-paced real estate market of Australasia, such adaptability is invaluable.

3. Tax Benefits
Rentvestors can take advantage of various tax benefits. You can deduct mortgage interest, property management fees, and depreciation of assets from your taxable income.

Moreover, if the property is negatively geared (where expenses exceed rental income), you can offset these losses against your other taxable income. These tax benefits can significantly reduce the overall tax burden for investors, making rentvesting an attractive choice.

4. Capital Growth Potential
Australasian investors have witnessed robust capital growth over the years. While rental income can provide a steady cash flow, it's the potential for long-term capital growth that makes property investment so appealing.

According to CoreLogic, property prices in major cities like Auckland, Wellington, and Christchurch have consistently risen over time, offering investors the prospect of substantial wealth accumulation.

5. Reduced Lifestyle Compromises
Rentvesting allows you to live where you want, without having to make compromises due to budget constraints. This can be especially beneficial for those who desire a specific lifestyle or need to be in a particular location for work or family reasons.

By renting in your preferred area, investors can maintain their desired standard of living while pursuing their investment goals elsewhere.

6. Building Equity
Even though rentvestors don't live in their investment properties, they still benefit from the equity that accumulates over time.

As property values appreciate, investors build equity that can be leveraged for future investments or used to pay down debt. This equity growth can serve as a stepping stone to acquiring more properties and expanding your real estate portfolio.

In Australasia’s dynamic real estate market, rentvesting stands as a pragmatic and forward-thinking approach for investors looking to achieve their financial goals while maintaining control over their lifestyle choices.

As the property market in Australia and New Zealand continues to evolve, savvy investors should consider the advantages of rentvesting as a part of their wealth-building strategy.

Ready to take the first step towards rentvesting? Check out available properties on Lazarus.