What is rentvesting and how does it work?
In a nutshell, rentvesting is a pretty straight forward strategy whereby a home owner can choose to purchase a property with the intention to rent it out. And while they rent the property out to their tenants, they could then choose to live somewhere else more befitting of their lifestyle. For instance, you might decide that you’d be comfortable living in a smaller apartment and purchase a new property to rent out while you relocate to live in a separate space; receiving additional income.
Alternatively, plenty of rentvesters choose to purchase a new home, let it out to their tenants and then rent their own property to cater to their lifestyle. This is what is known as renting to let – which is what led to the penning of the term rentvesting (renting and investing). Although to some it might sound like somewhat of a waste of cash, it can be a very appealing concept to others; especially if they rent somewhere smaller and therefore cheaper (in most cases), whilst charging enough money from their newly purchased property to cover the cost of their rent and then some.
Who can rentvest?
Generally speaking, anyone that can afford to purchase a property can rentvest. As long as the new home is suitable for letting out to tenants, then the owner could charge them an amount that A) covers the rent of their separate property and B) allows them a little extra to act as profit.