What is Livevesting?
Word on the street is that livevesting is fast replacing rentvesting amongst the investor demographic. We investigated the ins and outs of the rentvesting movement back in June 2020, and it seems that many Queensland homebuyers are eager to learn the many ways to smartly expand, or start building, their property portfolio.
With the various government schemes available to homebuyers, along with the low interest rates; investing in a new home has become a lot more achievable for some.
What’s the difference between rentvesting and livevesting?
Rentvesting is where one purchases an investment property, rents this out, and then rents a home with lifestyle benefits that they actually want to live in.
Ayda Shabanz, Managing Director at Grow Property Group explains that rentvesting “gives you more options with the same (or less) weekly cash output”.
Livevesting on the other hand, is where one purchases a property with access to government subsidies. The property is purchased with the intention of long-term investment, complete with high quality benefits that also fulfil lifestyle requirements. Homeowners might live in the property for a minimum of 12 months before selling and capitalising on its gains. While it is typically a larger investment, the benefits usually outweigh this as the property exhibits higher capital growth. Livevesting has previously been appealing to high income earners, however it is increasingly becoming more attractive to first homebuyers as they have access to various government incentives.
First home buyers can potentially access up to three grants, whether it’s the First Homeowner Grant, Homebuilder grant or the First home concession. In addition to this, it is a good time for first home buyers to invest in the property market, as they can benefit from low interest rates and predicted positive economic growth, according to the Reserve Bank of Australia (RBA).
While the government incentives are welcomed, the REIQ is calling on stimulus measures to be applicable to established housing to ensure the long-term stability of Queensland’s property market.
How to smartly adopt the livevesting movement
“To successfully adopt livevesting, buyers must have a long-term investment strategy and choose the right source of asset from the get-go,” says Richard Crabb, founding and managing director of ASPIRE Property Advisor Network.
Crabb has a few top tips for buyers to consider when shopping for their investment property. He suggests opting for a property with “low maintenance and good quality fittings, fixtures and finishes, and to avoid builder upgrades that will tip into overcapitalisation”.
Often homebuyers can get caught up in the excitement of owning their own home, particularly for the first time. While it can be difficult to steer clear of the homely additions, it’s important not to overspend on luxuries that will only increase your expenditure.
“These buyers 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 desires are,” says Crabb.
Rentvesting vs Livevesting
With the low-interest rates and increased access to government schemes, it seems livevesting is becoming a popular investment initiative amongst first home buyers.
However, it’s important to consider the many externalities that can affect your investment property. Whether it be market fluctuations, economic environment changes, dwelling types or tax considerations; these all may impact your expenditure and gained assets.
When it comes to expanding and building an investment property portfolio, there’s no right or wrong to do it. What works for some, may not work for others. Ensure you evaluate all the risks associated with each investment option, and seek professional advice from an REIQ accredited agent.