Rentvesting: The millennial trend that’s taking off

Updated: September 22, 2018

It’s no news to anyone in the current economic climate that getting onto the property ladder can seem near impossible, especially for the younger millennial generation looking to live in the city centre or more expensive and exclusive locations.

Row of rental terraced houses

Rentvesting is really taking off this year. Is it the right option for you?

What is rentvesting?

A homeowner buys a property in an area which is cheaper than their desired neighbourhood and rents it out. The owner is then free to rent a home in the area of their choice to live in.

Many people are asking, does this really give them the best of both worlds?

This type of property purchase gives the person the ability to get themselves a solid asset and build equity or a property portfolio whilst they maintain their lifestyle and make fewer compromises now. However, lots of people are more sceptical of the long term costs of this type of choice.

Obviously, every case is different and you should always seek financial advice before making big lifestyle decisions like this.

Advice for those looking to rentvest

Consider what would happen if your property became vacant suddenly or for an extended period of time. Would you be able to cover the costs of a mortgage on top of your rent? Would you be willing or able to move into the property, even in the short term, to bridge the costs? Landlords should always have some liquid capital saved for periods of vacancy, but when rentvesting that seems even more necessary.

Research and find a good online letting agent offer the perfect service to complement any property or portfolio you have. Helping to mitigate some of the associated risks with our tailored service plans. Rentvesting can be a brilliant choice in planning for the future, if carried out in a sensible and secure way.

An external agency will give you more security in filling any property vacancies and avoiding having to dip into your savings, as well as being clued up on laws and legislation. Online agents are usually much more competitively priced than those on the high street without a compromise on service standards.

Consider property law, taxes and interest rates

Property laws, tax rates and higher interest levels on investment loans would be other factors to consider. It’s certainly a more expensive option than living in your own property. You should take the time to weigh up exactly what is more important to you. Do you need to live in central London for work but cannot afford it or can you be more flexible with your location?

Do your homework

Which suburbs are best for rental properties? Where do people looking to rent want to live and what demographic would you prefer to have in your property? This can hugely affect how the property is valued as a rental and the relationship you could have with your tenant. Price your rental property accurately to ensure maximum occupancy at all times.

Can you really afford it?

Landlords need to take a lot of consideration when buying a property as it’s a big commitment. Many people get themselves into a financial mess buying a property before they are really ready or for more than they can sensibly afford in the long term. Do make sure you’re confident that you can cover all of your expenses for the next few years at least.

Is rentvesting really right for you?

Well, if you’re looking to get into the property market quickly and consider it to be a solid wealth creation strategy, then it could be. It’s important to look at any type of business endeavour just as that. Try and remove the emotion you may have for a first property.

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