What is Rentvesting?
Rentvesting is only a recently coined term, and in simple terms means you rent where you live, and invest elsewhere. This may be investing in other property or even shares. The most important part is that you are investing at least somewhere. Many people probably assume rent is “dead money” and it is something that is talked about a lot. I disagree, it would be the same as saying money for food is dead money. We need food like we need shelter and warmth, and a house provides that, regardless of if we own it. The only time renting may be considered dead money is if we aren’t doing anything else to try and build our wealth.
When might you choose to Rentvest?
There are a few reasons why you might choose to rentvest:
1. You Enjoy Renting.
You may really enjoy renting, and owning your own home may not be one of your goals. In Australia owning your own home is pushed to be the most important milestone, however it is not for everyone. Especially if you are not ready to settle down or don’t know where you will be living in the future, it makes total sense to rent and stay flexible.
2. Where You Want to Live is Out of Your Price Range.
If you live in a capital city, prices may be way too high in the suburb you want to live. Rather than giving up your lifestyle to afford your own home, you could rentvest! Buying a property in a cheaper suburb or even another city or state would still allow you to invest in property without giving up your lifestyle. It is a win win! Property investing also comes with tax offsets that you don’t get from owning your own home, which is handy when trying to accumulate assets.
3. You May Not be Interested in Owning Property.
The last reason why you may choose to rentvest is because you don’t want to own a property at all! While most Australians are all for owning there are own home, there are many countries all over the world who have the majority of people rent for their entire lives. This is completely normal. Owning property comes with a lot of responsibility, regardless of if you are living in it or renting it out. Another option could be to invest in shares instead, which require little effort if using a buy and hold strategy.
At the end of the day, what you choose to do with your money is up to you! I currently live in my own home as it was the best option at the time. I plan to rent it out in the future so will probably also move back to renting eventually. As I said earlier, renting isn’t a waste of money as long as you are putting your money to work somewhere else. This could be by investing in property in a cheaper area or investing in shares instead. Every person is different and will choose a different path. I hope this post has given you some food for thought and if you are still renting has you thinking about starting to invest.