Tens of thousands of ambitious property investors over the past decade have chosen to rent in postcodes that they love to live in, and then invest in postcodes they can afford to buy.
This popular trend has become known as ‘RentVesting’ .
Now there’s a new trend emerging that could soon be widely recognised as ‘LiveVesting’.
This strategy has emerged thanks to a range of federal and state government incentives helping 1st home buyers afford to enter the property market.
The attraction of our regional lifestyle cities is also playing a major role in fuelling this trend, as thousands of Australians exit our biggest cities and relocate to more affordable locations.
Many of these property buyers are even taking their big city jobs with them thanks to the rise in corporate acceptance around long term remote working contractors. Yes, another trend that is impacting the national property markets in ways never seen before.
So what is ‘LiveVesting’?
Once-in-a-generation events, such as the global coronavirus pandemic, have given rise to a new trend in property investing – ‘LiveVesting’.
This new investor demographic is fast replacing RentVestors as Australia’s property market winners. LiveVesting has resulted from an extraordinary confluence of factors which make it incredibly feasible under current circumstances to build a property portfolio from scratch.
LiveVesting is a new term devised to represent home buyers who qualify for government subsidies and select their initial property based on its long-term investment potential rather than its suitability as a home.
The current record low interest rates for home buyers are also helping to fuel the LiveVesting movement.
As a result of COVID-19, we have reached a significant level of financial assistance from both the federal and state governments, particularly for first-time buyers looking to purchase new homes.
This, combined with the exceptionally low interest rate environment, has resulted in the ability to acquire a new home with minimal deposit and a monthly loan repayment that’s well below rents in the same location.
LiveVesting buyers look at their home as a long-term investment and are prepared to move out if an opportunity presents, after they’ve completed a minimum of 12 months’ residence.
In order to successfully adopt LiveVesting, first home buyers must have a long-term investment strategy and choose the right asset from the get-go.
Not all property markets are suitable
LiveVestors must set aside the idea of the ‘forever home’ and choose locations based on long-term value growth potential and renter demand rather than being hung up on where they’d like to live or what their heart’s desire.
These investors will also enjoy years of depreciation benefits in the future.
Living in your investment first doesn’t disqualify you from claiming depreciation benefits in the future, and new homes are a great way to maximise this upside.