I have a question if I’m currently in a PPOR and consider rent vesting but the properties I’m around are 700 pw more expensive than what I can get for my PPOR in rental income then does it still make sense as much in-terms of buying capacity.
Hi @Nazzzy23, Thanks for the question. Mildura falls between the second and third scenarios, with a $435k median price and a 5.1% average yield. In the current high-interest rate environment, mortgage repayments are roughly equal to rents. However, if interest rates drop, buying would become slightly attractive. Mildura’s capital growth is currently average at 5.8% per year, better than most cities in Victoria.
Great content. How would this change for a 1 million dollar property? Another reason Im tempted to buy in Sydney instead of growth areas is wouldnt the price become too high and we would never be able to afford a house in Sydney. Is that right?
Glad you enjoyed it @Nazzzy23. A $1m house would be similar to scenario two. Assuming 3.8% rental yield, mortgage repayment (P&I, 6.5% interest, 80% LVR) would be around $450 per week more than rent. Rental yield differs depending on the location you’re looking at. You can also adjust the calculation with different interest rate, LVR, and other factors. As for your concern about Sydney: If there’re no emotional reasons, purely looking from an investment perspective, your financial situation differs in the two scenarios. • Buying in Sydney first would likely mean a high LVR and large repayments, which could slow your further wealth-building. • On the other hand, if you rentvest and build a property portfolio before buying in Sydney, you'll have more equity from portfolio growth for the Sydney purchase, resulting in a lower LVR; you’ll have higher income due to your IPs’ rents (and wage growth), which would increase your borrowing capacity. Like I mentioned in the video, with rentvesting, your money is still working for you while you rent.
@@Vivradio-lc5mz it’s a great question to raise, I’ll share a personal scenario after I was frustrated with the same thing. I did the math on rentvesting like here for myself personally. And found that the numbers in Sydney were soo much better to rent that when I was asked to move my wife and I hired a removalist, cleaner, packer/unpacker, installer etc.. who’d clear it all out and set our whole new house up too the way we wanted without any stresses for us. We even stayed at a hotel and enjoyed a mini staycation whilst they were setting it all up. So we could turn a moment of stress into fun and relaxation. The math/difference was just that big, it could happen and you’d still be up after doing that. Another thing we’d do is a couple months out from the lease we’d have a folder with everything needed ready as if we were going to be moved on. Payslips, I.d. And more. Making us the most organised we could be to apply for others with high success. As a result of the above - we had a very high strike rate when those moments came up - we turned a moment of chaos, moving, stress etc. into fun/excitement of change and also a mini getaway in our home city All whilst the math was still better We’ve eventually (now) gotten our family home after 10 years of on and off rentvesting. However since it’s our “forever” home for the rest of our life even though the math is worse we live with it
I have a question if I’m currently in a PPOR and consider rent vesting but the properties I’m around are 700 pw more expensive than what I can get for my PPOR in rental income then does it still make sense as much in-terms of buying capacity.
Can I just confirm, are you saying your PPOR mortgage repayments are less than the cost of rent pw in properties around you?
Exactly what I was looking for. I guess the people buying 5+ mil homes are super wealthy and don’t care about rental yield ;)
Thanks for your comment @jan11162 . Stay tuned for more!
Would you say Mildura is in a similar situation to Broken Hill with high rental yields? How is the capital growth for Mildura?
Hi @Nazzzy23, Thanks for the question. Mildura falls between the second and third scenarios, with a $435k median price and a 5.1% average yield. In the current high-interest rate environment, mortgage repayments are roughly equal to rents. However, if interest rates drop, buying would become slightly attractive. Mildura’s capital growth is currently average at 5.8% per year, better than most cities in Victoria.
Great content. How would this change for a 1 million dollar property? Another reason Im tempted to buy in Sydney instead of growth areas is wouldnt the price become too high and we would never be able to afford a house in Sydney. Is that right?
Glad you enjoyed it @Nazzzy23. A $1m house would be similar to scenario two. Assuming 3.8% rental yield, mortgage repayment (P&I, 6.5% interest, 80% LVR) would be around $450 per week more than rent. Rental yield differs depending on the location you’re looking at. You can also adjust the calculation with different interest rate, LVR, and other factors.
As for your concern about Sydney: If there’re no emotional reasons, purely looking from an investment perspective, your financial situation differs in the two scenarios.
• Buying in Sydney first would likely mean a high LVR and large repayments, which could slow your further wealth-building.
• On the other hand, if you rentvest and build a property portfolio before buying in Sydney, you'll have more equity from portfolio growth for the Sydney purchase, resulting in a lower LVR; you’ll have higher income due to your IPs’ rents (and wage growth), which would increase your borrowing capacity.
Like I mentioned in the video, with rentvesting, your money is still working for you while you rent.
Would be worth also considering the Uncertainty being a renter, especially for a family with kids and schooling in mind
What are your thoughts?
@@Vivradio-lc5mz it’s a great question to raise, I’ll share a personal scenario after I was frustrated with the same thing. I did the math on rentvesting like here for myself personally.
And found that the numbers in Sydney were soo much better to rent that when I was asked to move my wife and I hired a removalist, cleaner, packer/unpacker, installer etc.. who’d clear it all out and set our whole new house up too the way we wanted without any stresses for us. We even stayed at a hotel and enjoyed a mini staycation whilst they were setting it all up. So we could turn a moment of stress into fun and relaxation.
The math/difference was just that big, it could happen and you’d still be up after doing that.
Another thing we’d do is a couple months out from the lease we’d have a folder with everything needed ready as if we were going to be moved on. Payslips, I.d. And more. Making us the most organised we could be to apply for others with high success.
As a result of the above
- we had a very high strike rate when those moments came up
- we turned a moment of chaos, moving, stress etc. into fun/excitement of change and also a mini getaway in our home city
All whilst the math was still better
We’ve eventually (now) gotten our family home after 10 years of on and off rentvesting. However since it’s our “forever” home for the rest of our life even though the math is worse we live with it