Rentvesting: a forgotten way to own and rent at once

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You’re serious about getting into the investment game even though you don’t have a home in your own name. Fortunately, this isn’t an obstacle. Investing in property whilst renting at the same time, or ‘rentvesting’, made a splash early last year. It’s still going strong, despite getting less coverage in the headlines.

 

Why is rentvesting so popular?

There’s a number of things that make renting a more viable option among investors and people house-hunting in general.

 

Freedom: The word ‘mortgage’ scares the skin off lots of people and they can’t face the idea of juggling multiple home loans at once. It’s easier to sink their money and effort into their investment. Investors can give their full attention to the investment properties they own, like organising renovations, speaking with property managers, and organising depreciation inspections.

 

Postcode envy: So you can’t afford to own a home in that ‘happening’ and ‘ritzy’ suburb. But there’s enough in your budget to rent. You can rent where you want to live and then buy property in outlying suburbs. You can rent that fancy inner-city apartment but rent out a three-bedroom house to a family a few suburbs over.

Money: Investors who live in a rental home don’t have double the amount of taxes and duties that come with  owning an investment property and their own home. And there’s plenty of benefits that come with renting out a property for investment purposes. Tax deductions cover real estate advertising, some legal costs, and general maintenance. The amount of money earned back in tax depreciation will increase the longer the investor owns a property.

As a rentvestor you have more financial freedom

 

Rentvesting is a way for first-time investors to get on that first rung of the property ladder. Prices are increasing on the market but living the rental life has eliminated this affordability problem for some. Those who rentvest get the freedom, the bragging rights, and the money back that other property owners miss out on.

 

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Millennials and Gen Y vs. The Housing Market | Articles from around the web

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It’s a simple statement; young people simply can’t afford to buy a house in today’s market. Or can they? There’s a lot of layers to this statement made up of economics, investing habits and the trends of of the housing market. We’ve gathered articles from around the web to delve further into the issue. Can young people really not afford the Australian Dream? Or is it just more fake news?

Are Millennials Changing the Property Market? By Real Estate

They’re either lazy or savvy. Both adjectives are great headline fodder, but few are taking notice that Millennials are driving change in the property market. The differences are obvious, from how young people save right up to how they buy.

10 tips to become a Gen Y Property Guru by Real Estate

This is a good article for younger people wanting to know how to even get started in the property market. Homes and ‘abandoned shacks’ in Sydney are selling for millions, intimidating the next generation out of the game. But it doesn’t have to be that way if you play smart.

 

The best suburbs for Millennials to buy property by Domain

Compromise isn’t a word people like to hear when they really want something. It’s necessary though, if the younger generation wants to enter the property market. Buying in a capital city mightn’t be an option,

 

Home buying in 1982 vs 2016 by The Telegraph UK

The younger generation still desire to own a property. Surveys done have placed this goal above a successful career or having a family. The desires are the same but the gap on how fast it can be achieved has widened substantially, as reported by The Telegraph.

 

Property and income widens the generational divide by Newscorp

Competition from wealthy investors, less earning potential and rising property prices are just some of the challenges the young ones face.

 

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Ideal tenants for a commercial property

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Commercial property is a lucrative investment if you have the right tenant. Early on in your property investment planning, you should’ve given thought to who you want in your space. If you’re just starting out, this can act as a handy reference.

 

Coworking space agency

There’s more gig-workers, digital nomads, and freelancers than ever before. They all need a space to work, so why not make yours the best place?

 

Normally they won’t lease the space through you. This is done by the coworking space agency renting the building. If you’re creating a commercial property from the ground up, make sure your design includes a combination of areas than can be used as board rooms alongside open-plan working spaces.

When you’re shopping around for a new property, location is the biggest factor. You’re more likely to get a tenant like this if you purchase an inner-city location, close to public transport. New laws mean you can only depreciate the plant & equipment you install yourself. If the commercial property needs some ‘fixing’, like new taps and lights, you can deduct these without any trouble.

 

Restaurant/bakery/cafe

This tenant is always going to return a good rental profit when they find the right location. Restaurants, bakeries, and cafes are everywhere, both in CBD and suburban areas.

Cafe’s where people can work or relax with a coffee and croissant are always welcome

A commercial property like this will need up-to-date plant and equipment. You can install these yourself and claim the deductions over time. This includes ovens, stoves, refrigeration, and even the taps. If you’re lucky, a well-known cafe will need to open a second location and you’ll happen to have the perfect property ready to lease.

 

Retail boutique

These ones are trickier to lease and it’s best left to your property manager. Their screening process ensures the potential tenant is suitable to lease the space.

Retail is very competitive and some small businesses do struggle. But those who thrive will either open a second location to keep up with demand, or shop around for a larger space.

 

Media agency

A small or mid-tier media agency, like marketing, will definitely treat your commercial property with respect. It’s their ‘home’ and a place for them to host clients of their own. The property manager will interview them to make sure their level of income is suitable to keep up with the rent.

To attract a tenant like this, it’s good to keep the office space to bare basics. The tent will dress it up themselves. It’s also ideal to have a cordoned-off ‘boardroom’ space for private meetings.

 

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The great debate | Buy old property or build new?

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Are you holding out for a heritage home? Or would you rather build a house that pays homage to era’s past with heritage ‘features’? We’ve gathered articles around the web that compare the pros and cons of buying vs. building for investment purposes.

 

Buying a house vs. building a house by CanStar

property

Banking, insurance, and investing are all part of CanStar’s services. It’s natural they’d write something about property investment and the associated costs. They look at both sides equally, listing the pros and cons of each. This is frustrating to those who want a simple ‘yes or no’ answer but their advice is not to be taken for granted

Building your home vs. buying: What to know before you decide by Domain

Domain interviewed several experts in the property field about this topic. A buyer’s agent, realtor, builder, and lecturer all have their say. Ultimately though? It depends on  the investor and their priorities.

 

Building your own Investment Property from Scratch by Your Investment Property

This article is written by Lindy Lear, a successful investor who built a portfolio of eight properties in three years. She takes readers through the process of building a home for investment purposes. This starts with choosing a property and ends with the amount of the (many) tax benefits the reader can claim if they follow through on their plans.

 

The big match up: buying old or buying new by Your Investment Property

Your Investment Property pits an investment strategist against a new homes developer in the debate. Both sides have valid points, some of which you mightn’t have thought of.

 

Is Buying A House or Building a Home a Better Investment? By Home Together

 

Home Together asks the questions the investor’s need to answer so they can decide what’s best for them. There’s even a downloadable checklist included!

 

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6 signs of an amazing property manager

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When you purchase an investment property you can’t shoulder the burden of managing it yourself. Investors regularly pass this duty on to their property managers. Of course there’s a few ‘unreputable’ characters out there, but the professionals are worth their weight in gold (or rental profits!).

When you’re comparing agencies and individuals, make sure you’re noting down these five points:

 

Their vacancy rates
As in, they’re minimal. Good property management equals low vacancy rates. Your property won’t lack for tenants because the manager has done their job properly.

Senior management aren’t afraid to be hand-on with the work and that’s another reason why some firms are so successful. The more experienced people are still in the game, doing their best for their clients.

 

They have a network of services
Yes, the manager’s main job is to MAINTAIN your properties and make sure the rent is getting paid. But they should offer more than just this basic service. A good firm will also check the market to make sure rent is fair. They’ll calculate invoices for you. There’s a network of trades on speed-dial when something has to get repaired. In short, you don’t have to lift a finger, because your property manager should be taking on most of the responsibility.

Got a property problem? They have someone to fix it.

The door’s always open
Irregular communication is a red flag. Property managers must call their clients regularly with updates about the homes and spaces they’re responsible for. It doesn’t matter if the news is bad. Transparency is key. Plus, when the client calls, they’ll always answer unless there’s an emergency.

 

They come highly recommended
If an investor is happy with their team, of course they’ll spread the word and recommend them. Investors reach out to each other regularly for advice about who to hire and what market actions to take.

If you know an investor with a good portfolio who seems to be sailing along with a big smile on their face, ask them who manages their properties. Alternatively, you can do a Google search and look at recent My Business reviews.

 

Everyone’s happy
If people in the property management firm look like they’d rather be somewhere else, it’s best to walk right out the door again and not take the meeting. If staff are happy and content in their job, they’re going to do their best for YOU too.

 

Genuinely happy staff will care more about your investments

 

The firm is a well-oiled machine
Your property manager should have a regimented schedule that encompasses everything they do. Inspections are a regular occurrence alongside rent payments and client meetings.

 

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The one depreciation law change you absolutely need to know

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The 2017/18 Federal Budget brought about some changes that directly affect investors looking at properties to buy in the future. Starting from May 9th 2017, the ability to claim depreciation on certain assets has changed.

From July 1, 2017, the Government will limit plant and equipment depreciation deductions to outlays actually incurred by investors in residential real estate properties.

 

So what does this mean?

When you buy a property from a previous investor, you can’t claim the plant and equipment deductions. Capital works aren’t affected, so you can still earn money back from this.

Plant and equipment are the ‘easily removable’ items located in the property such as bins, white goods and any other furniture that you bought for the home. Remember  that anything $300 or less can instantly get written off as an expense.

 

I bought a property before the May 9th announcement

Then you’re in the clear. You can still claim plant and equipment depreciation if you settled the home before 7:30 pm on May 9th.

If you settled after, then unfortunately you’re out of luck. It doesn’t matter if those taps or that couch are a few months old. To claim, you must ‘incur the expense’ yourself.

 

So what CAN I do?

Capital works depreciation is still claimable, so investor’s don’t totally lose out. You can also pay less capital gains tax when the property sells for a profit. Simply subtract the resale value of the plant and equipment from the time of purchase to how much it’s valued by the time you sell.

Purchase value – resale value = CGT offset

Investor’s won’t have to do the maths themselves, however. The quantity surveyor writes these calculations on the depreciation schedule.

 

Do I need to rethink my investment strategy?

You certainly need to scrutinise potential purchases a lot more closely. Your aim is to generate income from a rental property, whether commercial or residential. There’ll always be a debt and recovery period before you make a profit. With the new law changes, investors will look at new homes now more than ever over second-hand properties.

What $500,000 can buy you in the 2017 property market

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Thanks to constant news coverage about rising population numbers, employment, and therefore housing affordability, the property market seems less accessible than ever. Investors are asking themselves what they can buy for half a million, so we’ve compiled a short list. One home for each state around Australia.

 

  • Queensland

14 Macquarie Street, Teneriffe

Offers over $450,000

2 bed, 2 bath, 1 garage

This apartment is in the trendy suburb of Teneriffe. It comes with river views, easy access to the city, and a host of gyms, shops, and restaurants. Similar properties are around the same price, going up to as high as $2 million.

 

  • New South Wales

74 Tucklan Street, Dunedoo

$195,000

4 bed, 2 bath

This home is in the rural village of Dunedoo, 100kms from Dubbo. It’s on the market as a ‘recently renovated property’ though new owners can modernise it as they like. This is a steal in today’s property market, and has the potential to be a home for holiday tenants.

 

  • Victoria

59A Vale Street, Alfredton

3 bed, 2 bath, double garage

$349,000

Not bad for a Ballarat townhouse. This home, only three years old, is good for those investors looking at homes for empty-nesters and downsizers. There’s a small backyard area and spacious bedrooms inside. The townhouse is close to shops and schools for small families.

 

 

  • Tasmania

5-7 Doric Court, Zeehan

3 bed, 1 bath, single car

$125,000

Investors looking for a small family home on the property market would snap this up for a minimal amount. Zeehan is a small town of less than 800 and the house is down the road from the local school. It’s marketed as having a double block of land, new external Colorbond, and a rumpus. The interior is quite dated, making it a prime candidate for renovation.

 

  • South Australia

503 Fullarton Road, Highgate

2 bed, 2 bath, garage

$495,000

Just within the $500k budget, this stunning house is a rarity. On the outside, it looks like a grand home, a mansion, even. When really, it was renovated to work as an apartment block with three units. The exterior keeps its Mediterranean style character from when it was built in the 1930s, but the interior is totally modern, complete with an elevator. This is definitely a steal in the 2017 property market.

 

  • Western Australia

26 Collins Street, Kalgoorlie

3 bed, 2 bath, garage

$265,000

You can spend just over half your budget and get a lot back in return in WA. This cottage was built in 1927 and leaves investors some room to redecorate, so you can claim depreciation on any new fixtures you install. There’s a large amount of exterior space, perfect for tenants with pets and children.

 

  • Northern Territory

9 Dowling Street, Katherine

2 bed, 2 bath, garage, pool

$340,000

Getting a home with a pool for less than $500,000 is a miracle, but it can be done if you’re looking at the property market in the Northern Territory. This home recently underwent a massive renovation that included the installation of the pool. Located in Katherine South, the home is close to the library, the public hot springs, and national parkland, making it good for family/tourist tenants.

 

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The great debate: 5 articles about smashed avo vs property investment

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On May 16th 2017, property guru Tim Gurner appeared on 60 Minutes to talk about the property market and he didn’t hold back. What he didn’t expect, though, was to set off a chain reaction of jokes, puns, and a genuine debate about breakfast.

His comments that young people can’t afford to get into the market thanks to meals out and their daily coffee hit received a lot of backlash, but also changed the way we looked at Australian property investment. We collected some of the best articles about the issue from around the web so you can make your own judgement.

 

 

 

‘There was no discussions around, could I go out for breakfast, could I go out for dinner. I just worked.’  – Tim Gurner

A quote from the original interview that sparked an uproar. Tim Gurner, property investment advisor and developer speaks candidly about his struggles when he entered the property market…and why the new generation has no chance of getting their foot in the door.

 

 

 

Travel, smashed avo, or that avocado farm in rural WA? Mark Campbell, writer for the Sydney Morning Herald, looks at the ‘lazy’ millennial generation and their prospects for entering the property market. Are they really in trouble when they’re spending money on trips to South America and $15 smashed avo with a sprinkling of dukkah?

 

 

 

The debate made its way over to the USA, where a savvy Twitter user did some maths and shared the results.

 

 

How many serves of avo smash a day equals the profit your investment property brings you in capital? This tongue-in-cheek piece from Real Estate has some unexpected figures.

 

 

What if it’s not the breakfasts’, or millennial’s, fault? Nick Evershed from The Guardian helpfully points out that markets and general affordability, or lack thereof, are putting young people out of the running.

This article even comes with a fun ‘luxuries’ calculator that equates the amount of ‘fun stuff’ people can do, eat, and more with the equivalent of a property investment deposit.

 

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8 amazing home builds and overhauls from around the web to inspire your investment property renovation

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Are you looking at the type of investment property you can ‘fix-up’ and flip for a profit? Or even turn into a rental? There’s hundreds of thousands of design pages, and just as many websites and blogs,  it’s difficult to filter out the noise. We’ve compiled some of the best ideas.

 

Curb appeal

Bringing Elements Together

This new home in Geelong brings different materials together to create a stunning facade. When you’re renovating your investment property, or building from scratch, look at the curb appeal of the other homes in the neighbourhood and see what you elements  can mimic…if not do better.

Lounge

Living Room Inspiration by HiPages

The lounge/living area is where your tenants will end up at the end of a long work day. They’ll kick up their feet, put on the Foxtel and spend the night in with a movie. Wood and concrete are hardy materials, though carpeting and rugs are more comfortable to walk on. You can change the finishes depending on the lifestyle and type of tenant you’re marketing to.

Dining/Kitchen

Galley kitchen designs to inspire a kitchen makeover

The heart of the home. Family members and visitors spend most of their time in this space. It’s also the most highly judged of the rooms in the investment property. Don’t scrimp on the paint or finishes. The space is meant to be functional, but also make it warm and welcoming, like this galley-style kitchen. Many modern kitchens have an island bench and an open-plan design that flows seamlessly to the dining area.

Master Bed

5 incredible house design ideas & images from Real Estate

Prospective buyers look at kitchens and bathrooms for value. Bedrooms, though, should never be overlooked. Master bedrooms are meant to serve as a sanctuary, preferably with an ensuite like this one above in Flinders House, Victoria. You can claim depreciation on the new fixtures when you renovate the investment property.

Bathrooms

Bathroom Ideas – Bathroom Designs and Photos by Real Estate

Rainfall shower heads, deep bathtubs and heated towel-racks? Tenants have high expectations and they’ll look right over your investment property if it doesn’t stack up.

 

Second Bedroom

Create an inviting guest bedroom

The more bedrooms, the higher the rental income! Your investment property might cater for roommates, couples, or a three-person family. But make the bedroom styling neutral. This way you can appeal to the maximum amount of buyers. Jo Carmichael from HomeLife has some useful tips in this article.

 

Study

Before & After: A Whole New Look for a Home Office

Simple, yet functional. If your investment property has an extra room, turn it into a home office. This is great for working parents and people who need an area to work on homework and projects.

Outdoor living

Affordable Sydney Patios by Houzz

A patio, balcony or a backyard is part of the australian way of life. If you have outdoor real estate, use it. Spruce it up with some new lawn, paint the fence and design it in a way so that it flows from the kitchen/dining area. INDESIGNS from Sydney has managed to pull this off in a Scandinavian-style cottage, complete with a kids cubby house. You might not put one in for your tenants, but it certainly adds character.

Garage

How to declutter your garage by Real Estate

Even this part of the house needs some attention. You mightn’t need to renovate it, but it’ll need a good clearing out. The tenants in your investment property most likely drive and the garage needs to have room to fit at least one large vehicle. This area also doubles as a storage space and adding shelves with help with functionality. Don’t forget about curb appeal; the exterior of the garage is always visible from the street.

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4 articles that give investors a reality check about the property market, worldwide

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The property market is competitive, no doubt about that. Internationally and locally, investors are getting priced out of one market and moving onto another, before the same cycle repeats itself. Australia’s had a ‘golden age’ of affordability, but in recent months that rosy period has come to a screeching halt.

 

 

Sydney and Melbourne’s property markets are slowly outpricing potential investors thanks to rapid employment growth, among other reasons. While prices in these cities have risen over 10%, Brisbane’s growth remains in the single figures. But is it too good to last?

 

The UK has one of the priciest property markets in the world, and the younger demographic is certainly feeling the pinch. This is all thanks to changing work conditions, the drama of Brexit, and the ‘silver generation’ using their experience to snap up hot real estate.

 

This is an opinion piece, but the context is relevant. This debate was sparked by investment professional Tim Gurner’s scathing observation about millennials and their lack of potential to crack the property market. Why? Because they love $4 coffee and avo smash everyday. Even though the debate has raged back and forth, it’s put the way we work, save, and spend in the spotlight and there’s no sign of it slowing down.

 

There’s a glut of apartments in Brisbane, and developers are so desperate to sell them they’re offering incentives to buyers. This comes as a result of  oversupply and minimal demand. ‘Offers’ include the likes of free rent (for a period), vehicles and free avo toast everyday for a year. That’s probably another house deposit…or a new couch.

 

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