Consider the strategy of ‘rentvesting’
Recent first-time home buyer, Jennifer K, considers the strategy of ‘rentvesting’.
If you’re like me, when I was looking at buying my first home I came across the term ‘rentvesting’ quite a bit in my late night trawls for advice from the World Wide Web. I just brushed it off at the time, thinking to myself: I’m not looking to ‘rent’ and I’m not looking to ‘invest’. This is not what I’m looking for.
In actual fact, it’s quite a smart concept and worth at least exploring.
We all have different reasons for wanting to buy into our first home, whether it’s to get in the market, to get out of the renting game or simply that we want something of our own. And there are options out there to suit everyone.
So, ‘rentvesting’ – what is it?
Say the location where you really want to live is way out of your purchasing budget, rentvesting allows you to rent and live in the area you want, while investing in a more affordable area, potentially off-setting your cost of living. This is a brilliant way to enter the market without compromising where you want to live.
It’s not for everyone though, and the concept has its pros and cons.
On the plus side, it gives you the flexibility of not being locked down in one place. If your circumstances change while you are renting, you can move into something more suitable. Easy. You can start building your investment portfolio sooner rather than later. And by not living where you choose to buy, you can be a bit smarter about where you choose to invest, rather than being persuaded by your ‘wants’. It also gives you the option, if rental prices allow, to live in your dream home now, without compromising on features that you perhaps may not be able to afford if you were buying.
On the flip side, buying your first home is a big achievement and having someone else live in it can seem a backward step to some.
One of the most exciting things I found when I purchased my home is that I could do anything I wanted to it. If I were still renting, I couldn’t do that.
Also, if rentvesting, you may be going from just one form of house payment to two, so it’s important it all fits within your budget.
While a great concept, particularly for those not wanting to compromise on where they live, it is still a big financial decision to make. Ensuring this is the right decision for you is vital.