Wherever you are in the real estate world, there are boundless possibilities for every budget and every personal character, all of them offering benefits and drawbacks.

Let's take a look.

Rentvesting

We've written a few articles now on being a renter and investor simultaneously - otherwise known as rentvesting.

As we earlier noted, the key reason for rentvesting is that you can invest where you can afford to buy and rent where you want to live (but can't afford to buy).

NB: the difference between mortgage repayments and rental repayments in your preferred house and location should be high.

If such repayments are similar, don't expect rentvesting to return strong financial benefits.

Rentvesting pros & cons 

Just like 100% property investors, rentvestors need to pay council rates, utility bills, and possibly, body corp fees, for their investment property.

Property maintenance and management issues, as well as tenancy concerns, also need to be managed - and at the same time as you live day-to-day as a renter.

Yet rentvesting offers plenty of excellent opportunities, with the main one being you have your foot in the door of real estate.

You can also definitely accrue good wealth from rentvesting, if nothing else from putting any additional funds towards paying rent at your live-in rental home, or towards saving for a second home.

We like what Michael Yardney of Metropole says about rentvesting:

"Even though you’re renting, the property you buy is an asset that’s growing in value and being (in part) paid off by your tenant.

"(And) you’re gaining equity that can launch you into other property purchases down the track, including a home to call your own."

Investing

Property investors in 2023 need to be aware of several points.

1. Investors need to factor in low vacancy rates and rising rental prices 

Why?

As we recently explained, laws and rules are swinging around in favour of tenants, rather than landlords.

2. High interest rates and general cost-of-living pressures aren't helping investors either, the majority of whom are your average Mum and Dad type

According to the Australian Landlords Association, more than 80% of rental properties are owned by individuals, or “mum and dad investors”.

Australian Taxation Office figures also show about three-quarters of people who own investment properties have just one such property (as well as their own).

Investment pros & cons

In the long term, property investments can achieve great wealth for you and your family.

And, as we've just said, vacancy rates are at amazing lows while rental prices are up and running very high.

But property investment is not an easy, set-and-forget way of accruing wealth, particularly if you're a first-time investor.

As Michael Yardney of Metropole warns, 50% of property investors sell up in the first five years.

"Of those who keep their properties, the vast majority never end up owning more than one or two properties," Mr Yardney said.

But he adds that a "well-executed plan" can make the difference between strong investment wealth and an investment sell out.

Mr Yardney advises the following:

• Treat your property investment like a business
• Understand the cyclical nature of the property market
• Having a cash flow reserve for cycle downtimes and unforeseen expenses
• Understand the property investment, finance, and taxation systems

We would also suggest the following:

• Buy with your head, not your heart
  
• Research your potential investment neighbourhood
  Is it a growth suburb where your wealth will accrue - or the opposite?
  
• Consider your investment goals 
• Assess tax implications particularly positive and negative gearing
• Consider home loan implications - Lenders generally consider investment loans to be riskier than owner-occupier loans, largely because buyers are more likely to default on mortgage repayments for a property they don't live in, so expect stricter conditions and higher interest rates
• Don't underestimate surprise financial costs such as emergency maintenance issues or long tenancy vacancies
• Have an extremely reliable property manager, particularly if don't live close to your investment
  

Owner-occupiers

Buying a home will be one of the biggest - and most expensive and stressful - events of your life.

But one of the great silver linings of COVID (yes, there are a few!) is the number of government first-home buyer schemes now available.

Many of these ensure this group of buyers doesn't need the average 20% home loan deposit but instead, a 5% one.

You also don't need to pay Lenders Mortgage Insurance as governments will act as guarantors to your lender for the remaining 15% of your loan.

Lenders are also far more aware these days of buyers' financial struggles which, while it may not equal more empathy or a better interest rate, can be helpful.

Owner-occupier pros & cons

Unlike renters, who are experiencing rising rental prices and will always face the possibility of their landlord wanting them to leave, homeowners can rest easy for life.

Yes, expensive emergencies will occur and you'll have to pay bills you never had to pay as a renter, such as council rates.

But ideally, the rent you once paid will simply be switched towards mortgage repayments - and such repayments, while they can be high, are helping your future, rather than someone else's.

Plus, if you plan on keeping this property long-term, you can almost guarantee it will accrue strong wealth for you, which you can put towards either your retiree downtime or another property.

Then there's the freedom of doing whatever you like to your house from adding a built-in wardrobe to the bedroom to renovating the bathroom.

However, it is still crucial to put aside savings funds, on top of mortgage repayments and council rates, especially if you're an older first-home buyer looking towards retirement.

As such, you may need to continue to tighten your financial belt as you did while saving for a home loan deposit.

Also, just like rentvestors and investors, you'll need some easily available finances - or a buffer fund - for emergency situations such as a broken hot water system or a lost job.

And, if you're on a variable loan, you'll need to keep a constant watch on the Reserve Bank of Australia's monthly cash rate announcements.

Even if you're on a fixed loan, it's important to regularly consider your interest rate and lender and to not be afraid of refinancing to another loan or lender if need be.

Let us help you

Whether you're a potential rentvestor, investor, or owner-occupier keen to buy or sell a property, Listing Loop can help you.

As Australia's leading marketplace for off-market, pre-market listings and more we have an extensive portfolio of properties for you to choose from. 

Sign up today for FREE access to our hub of properties or for more personalised support, learn about our BUYER ASSIST service here.