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How to Get Ahead by Rentvesting

The idea of rentvesting has been used by highly dedicated and committed wealth creating property investors for decades. However, it remains a lesser-known approach to building an asset base. It deviates from the traditional ‘buy a home, pay it down and then buy an investment property’ approach, but it may well be the ideal path forward for many modern Australians. The intent of a rentvestor is to remain a tenant while also becoming a landlord. In doing so, they build their asset base independently of home ownership until such time as they can afford their much sought-after dream home. The question is: does it work and how effective is it really? In order to illustrate the value of rentvesting, let’s take a typical low- to middle-income couple and look at the choices they have in order to get started on their investing journey. We’ve introduced you to Kelly and Hamish, a hypothetical couple in their ’30s (see boxout, right). Kelly and Hamish essentially have two options available to them: Save a deposit, borrow as much as they can and buy their own home – even if it takes them years. Then get into their first investment property by saving another deposit through earned income and by drawing on any possible equity raised in their own home. Again, this may take several years. Rent, save a deposit, borrow as much as they can, and buy an investment property. Repeat this while renting. READER SCENARIO Kelly and Hamish are beginning to feel like they’re missing out. Aged in their mid-’30s, they think they’ve been doing all right so far but believe...
How would you feel being a 1% Property Investor?

How would you feel being a 1% Property Investor?

Have you considered playing a bigger game than the average property investor? What if we were to say that it might not be as far-fetched as you think?In fact, it’s quite feasible for a dedicated property investor to eventually be ranked in the top 1% of property investors in Australia. This would sound outrageous if it weren’t for the fact that we have clients and colleagues that fall into this ‘elite’ investor category.  They’re not all high-income earners either. In fact, from our observations over the years, having a high income doesn’t always guarantee the best investment results.Ok, so what does it mean to be just an average property investor in Australia? Surprisingly, it means that you would be among the over 70 percent of landlords that have just one investment property. Even more surprising is that it’s quite likely that you would sell your investment property within five years.Despite media speculation portraying greedy investors snapping up multiple properties and making housing un-affordable for the rest of Australia, the commonplace reality looks quite different.If we focus on the 2014-2015 column in the table below, you can see that the decrease in numbers of landlords that have more than one property is dramatic. There are 1,468,949 landlords with just one property. If you look at the next row you can see the number of landlords with 2 properties is 383,505. You can see that relatively few investors have more than one property, and this drops rapidly to a low number having three or more: Owning two investment properties would put you in the top 19% of property investors, then the percentages decrease noticeably...