October 23, 2017

What is rentvesting and is it a good idea?

Who doesn’t want to have their dream home? Owning a home is a great achievement. However, with the ever increasing prices of real estate in Australia, it has become difficult to enter the market. People who cannot afford to buy their dream home enter the real estate industry through rentvesting.

This is the process of renting a home and investing in property that you can afford. If your dream home is a three-bedroom home in the city centre, the prices obviously are high and you may not be able to afford it as of the moment. With rentvesting, you will rent the property that you want then buy a property in an area where prices are within your budget. You can turn it into investment property which can help you pay your rental payments.

Is rentvesting a good idea? Here are some points to think about:

Your purchasing power doesn’t affect the lifestyle that you want.

Rentvesting enables you to live your preferred lifestyle and at the same time, have an extra income and build your property portfolio.

You can have a property sooner and with a smaller deposit.

Rentvesting allows you to enter the property market sooner, which will help in building equity. Eventually, you can use the equity to buy another property as investment.

Buying an investment property offers tax advantages.

Rentvesting comes with deductible costs such as interest payments, property maintenance, insurance, as well as depreciation. Take note that it is better to seek advice from an accountant so you will better understand the taxation advantages that you can get from your property.

You can make smart decisions when purchasing a property.

Buying a home comes with a lot of emotions since it’s your dream and you already have a picture in mind of the kind of life that you and your family will have when you live in the house. On the other hand, buying an investment property doesn’t come with emotions that you have when buying your dream home. When it comes to the investment property, you think about its potential ROI.

So, is rentvesting a good idea? It really depends on your goals. Bear in mind that this method of entering the real estate industry is not for everyone. Make sure to understand how investing in real estate works and determine if rentvesting will work well for you.

Do you think rentvesting is a good idea? Share your real estate tips in the comments section.

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More affordable options to enter the property market

Getting into the world of real estate investment obviously costs money, and with the ever increasing demand for houses and properties, you can expect real estate in Australia to become more expensive especially in prime locations. But this does not mean that you cannot go into the real estate industry. There are actually several more affordable options that you may want to look into so you can get started with investing. Here are some of the options to take into account:

1. Family equity loan

In this option, parents can serve as guarantors on a loan and even offer their home as security, while the principal borrower’s name will be on the loan as well as in the title.

2. Buy with other people

This option involves more than one buyer of the property. It can be with family or friends and the loan will be split among them. Bear in mind that banks implement different rules when it comes to lending and joint loans so make sure to study the terms carefully. You can also ask a lawyer to explain things that you’re not sure of. Also, buying property with other people can be risky. It’s essentially a business partnership and challenges may arise later on if one of you wants to sell the property, for instance.

3. Rentvesting

Enter the market sooner with this option that involves renting where you want to live while buying affordable property and putting it up for rent. Since the property is cheaper, you may not need to save a lot for the deposit. The major advantage of this option is that it enables people to live where they want and at the same time, use the investment property to grow their savings.

4. Consider properties in regional or rural areas

In general, homes are more affordable in rural areas compared to those in cities. Of course, it’s a matter of preference but as far as affordability is concerned, this is a good way to enter the real estate industry without shelling out a lot of money for deposit. Just make sure that the property is suitable for your needs and lifestyle.

These are some of the affordable options that you can consider if you want to enter the market and you don’t have enough funds for the investment. Do your research and choose which option works well for you.

Got other tips on investing in real estate investment? Share your real estate advice in the comments section.

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How to Search for Your Dream Home and Stay within Your Budget

Buying real estate in Australia is a milestone that needs careful consideration. After all, it costs a lot of money, and a lot of factors come into play when investing in real estate. When it comes to your dream home, you obviously look out for various details to ensure that your home has everything you wish for. But before you get caught up with all of these, make sure to keep these guidelines in mind so you can find your dream home while staying within your budget:

Know your budget and stick to it

As with buying any other major purchase, it is always important to determine what you can afford and stick to it.  It is very easy to get carried away, especially when details of your dream home are concerned.  Just think about what you can spend on your dream home and work around that amount.

Identify your needs

Do you wish to move in right away or do some renovations? This is an important factor as it will affect the type of home that you look into.  You can stay within your budget if you will get a house that’s ready for moving in. However, make sure that it meets your dream home requirements.  On the other hand, it will cost more money to buy a home that you want to customise to fit your needs. Take note that if you’re looking at a house and it’s close to being beyond your budget, you won’t have any funds left to renovate it.

Choose the right builder

With so many builders out there, it is wise to do your research before investing in real estate. Look for one that has been in the industry for several years. Have a shortlist of potential builders and check their portfolio. You can also seek advice of family members and friends who have experience in investing in real estate in Australia. It is likewise important to ask about insurance and warranties.  Getting a building permit is usually done by the builder, but confirm it just in case.

Check the neighbourhood

Make sure that the community suits your needs. Check if establishments such as banks, local shops, schools, and restaurants are near your area.  Proximity to major roads and public transportation is also one thing to consider. You can likewise talk to residents so you will have a clear picture of what it’s like to live there.

Got other real estate tips? Share your ideas on investing in real estate in the comments section.

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Why You Should Pay Attention to Hipsters Before Investing in Real Estate

Real estate in Australia isn’t immune to the trendsetting abilities of hippies and hipsters. They can change the perception of a suburb from ‘dirty, down and low growth’ to ‘Edgy, cool, and with a price heading to the stratosphere’.

Taste are always evolving.

I couldn’t have imaged my grandmother eating anything that was Japanese, and my parents wouldn’t have touch raw fish or seaweed when they were growing up.

But if you were to look in the food court of any suburb shopping centre you’ll see people eating Sushi like it was, well… a burger with fries.

Each generation has its different goals, aspirations and needs.

But, before these changes become fully entrenched it is the hippies and hipsters who adopt them early and forge a path to mainstream acceptance.

Hippies and hipsters are all about not following the crowd, forgoing group approval to live by their personal values.

The trend hippies and hipsters driven change can also be seen in real estate. Every city has a suburb or area which you wouldn’t have dreamed of buying in until they moved in and it became cool and ‘red hot’.

As a generalisation hippies and hipsters don’t get sucked into the race to the suburbs, bigger houses, whiter fences or manicured lawns. They look for areas which are more edgy, expressive, and communal.

In an inner-city area, the difference between a ‘no way’ suburb and ‘uber cool’ is a couple of artesian bakeries, a community garden, bike parking, a yoga studio, a beard specialist barber and an alternative primary school. Redfern in Sydney is one somewhat recent example, Brisbane’s West End another.

Small country communities or beach side towns are also popular due to the ability to live an independent, ‘natural’ life; think Byron Bay, NSW or Healesville, VIC.

Once the trend setters move in and provide or demand services, these areas become quickly gentrify, and property price rise.

Now, this isn’t to say that it is only hippies or hipsters who change the shape of real estate Australia. They typically set up in areas, that have huge potential already.

Nor should you make investments, real estate or otherwise, purely on a single factor.

But before you write off areas based on your personal distaste, consider its individual merits. If the hipsters and hippies are moving in, it might be worth taking another look.

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