Investing in Property While Renting
Most Australians like to invest in properties. One of the latest trend in property investment sees investors purchasing investment properties, which renting. This new approach also called Rentvesting is becoming extremely popular, especially amongst younger investors. If you also want to invest in a property while renting one yourself, then you need to know the ins and outs of playing it this way.
# You Need to Know About the Tax Benefits
Investors who invest in a property may enjoy multiple tax benefits. One of the main types of tax benefits is negative gearing. However, many people have not heard about it. It basically means that the amount of money spent on purchasing the property exceeds the amount of rental income. Besides, negative gearing, improvements and repairs, outgoing maintenance, depreciation and deductions, such as interest on investment properties, can positively impact your cash flow. If you are unsure about tax benefits, you should always speak to your accountant in this regard.
You Should Understand the Volatile Costs
If you rent a house which has burst pipelines, broken and damaged cabinets, leakages, moulds and much more, then it is not your fault. You need not get your hands dirty to fix all these matters only if it is your fault. However, if you rent a property and buy an investment property, they will become your own problems. This is why it is important to look for a property that is well maintained and is not old enough. Being a renter, you can also face issues, such as mortgage payments, especially with the changes in the rates. This may occur when you landlord renews the lease, leaving you can in search of a new accommodation.
# You Can Cover Your Costs with a Positive Cash Flow
If you manage your property well, you can enjoy a really good income generating property. Also, you can have a positive cash flow. In fact, you can even cover the associated costs and mortgage payments along with the interest and the rental income. Additionally, if you are fortunate and are getting a healthy amount as rent, it could even cover your rental payments.
# You can Enjoy a Better Lifestyle to Suit Your Needs
Choose a rental property that suits your needs and preferences; therefore, you can ultimately enjoy a better lifestyle. For instance, if you are single and a professional, then you can also live in a one bedroom apartment to satisfy your needs and other requirements. On the contrary, if you are married, then your needs may differ and you may want to live in a multiple bedroom apartment with your family.
If you are planning to invest in a property while renting one for yourself, you should do your homework as you have a big financial responsibility lying on your shoulders. Also, it is wise to hire a real estate agent who can help you invest in a rental property seamlessly. Good luck!