You live in a great area with great neighbours and you love your home. But it’s rented.
And while you do want to buy so you have an asset, when you look at what you can afford, you realise at best you’ll be living in a shoebox, or at worst you’ve got to leave the area you love. This could mean kids changing schools, longer travelling times to work and living in a maybe not so quite desirable area.
If you’re keen to get into the property market this year, you may not have to give it all up.
Rent-vesting is the new ‘buzz word’ in property; it means a person rents a property in an area or suburb they want to live but can’t afford to buy in, and owns an investment property in another more affordable area.
There are different strategies to rent-vesting. For instance some may use it as a stepping stone to help them buy a home in their ideal location at a later date while others may use it as an income:
As well as being able to live in an area you like, there are some other pros to rent-vesting:
– You’re on the property ladder and have an asset.
– The chances are you probably require a smaller deposit because you’re buying a cheaper property.
– You’re now reaping the rewards of investment property such as earning an income and/or receiving tax deductible benefits.
– You still have the freedom and flexibility to quickly change your living location for relatively less cost or hassle.
– You have the choice of where to invest instead of having to factor in proximity to your children’s schools, work or lifestyle choices.
There are some downsides to rent-vesting which need considering. These include:
– You may not be eligible for some of the first time home buyer incentives because you aren’t immediately living in the property.
– You may be evicted from your home if the landlord decides to sell.
– You will still need to consider the usual risks of investment property ownership such as planning for unexpected vacancy and budgeting for other costs such as landlord insurance.
We always recommend you speak to a financial specialist to find out what works best for your situation and you fully understand the financial risks involved.
As one of Newcastle’s longest established real estate offices we have helped hundreds of property investors realise their dreams over the past 40 years. Give us a call on 02 4954 8833 or pop into our Cardiff office for a chat – our friendly team would love to help you.
For more investor and real estate tips check out our Facebook page: www.facebook.com/Andriessenproperty