RENTVESTING: Why would we do it?
Okay, rentvesting. Why would we do it? and what the hell is it?
First of all rentvesting is renting where you want to live, and going investing somewhere else around the country. Now the old adage, rent money is dead money, well it's true if you're not putting it into an income-producing asset or using those funds for something else that's going to create financial wealth for you, alright.
My advice to the young is stay at home because the running cost of your life are very low gives you the ability to continue to invest in the meantime and set yourself up for the next 30 or 40 years. But, if you want to get out of home, rentvesting is definitely an option and should be put into the mix for you.
So why would we go and rentvest? Well first of all we might not be able to afford to get into the suburb that we'd like to buy and live our life, right, so we can rent there instead. We can choose which house we want to live in there and then go and invest around the country at an affordable rate with the deposits we've got and also monitoring the markets for maximizing growth there. So, plenty of flexibility there, but also we an get into markets potentially sooner, than buying in our own area.
Now you might say, well, when am I going to buy in the area that I want to live? Well, if you’ build your portfolio later on down the track and I'm talking maybe eight, ten years time, you can wheel back around with a new deposit to buy in your own home and maybe use some funds from the properties that you've already built up over the years, or maybe some some cash flow from shares or something like that, okay.
So why wouldn't we rentvest? Well usually the main two reasons are one, we get kicked out by our landlord, give us three months notice, you're out of there John, right, that's a mindset thing. I think we can get ourselves around that by just understanding that that may happen sometime, right, but generally speaking investors want you to stay in there as long as you can. The second one is I can't paint the walls I can't put up the new fence or design at the way want, right, but we can definitely make it feel homely for you and the family, or you and your partner, etc. So we can definitely make it feel homely, we just can't go that extra step and and knock down walls and things like that, so again we can get ourselves around that. So, the cash flow in our life should be enhanced by renting, because we haven't got council rates, we haven't got water rates, right, if we have got those things on our investment property, usually our tenants covering most of those costs, okay. So there we have it, the pros and cons of rentvesting.
You'll find that most of Australia's wealthy continue to rent even today. They build their wealth somewhere else and go and rent where they want to live. That might be waterfront, or it might be front and center to all the amenities. They've got choice, they've got flexibility and they live their life that way. Hope that helps.
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