'Rentvesting' is often touted as offering the best of both worlds. You can live where you want in a rental property, while getting someone else to pay off the mortgage on your investment property.
But new data from online mortgage marketplace HashChing has found that rentvesting is the most stressful situation for home owners, with 56% of rentvestors giving it a stress rating of 6 or higher, 10 being the highest stress rating.2
The independent survey also found that rentvestors were the most likely to refinance, with 49% thinking about refinancing their mortgages in the next 6-12 months.
The latest industry research suggests that 24% of first-home buyers in New South Wales and 20% of first-home buyers in Victoria are rentvestors.
Mandeep Sodhi, CEO and founder of HashChing, said much of the stress stemmed from borrowers under-estimating the costs and responsibilities of being a landlord.
He said, “There’s a lot more involved than just making sure your rent and mortgage is paid off every month. As a landlord, you need to factor in many additional and ongoing costs, from renovations, repairs and maintenance through to strata fees, land tax, landlord insurance and property manager fees.
“If the existing tenant leaves, you’ll also need to shoulder the entire mortgage payment, in addition to the rent you’re already paying, until you find a new tenant. And that can sometimes take a few months. It’s no wonder that most rentvestors are tearing their hair out."
Sodhi emphasised the importance of speaking with a mortgage broker before treading down the rentvesting path.
He added, “Many of our customers have successfully used rentvesting to build up an impressive property portfolio, but it’s not a path for everyone. It’s important to speak with an experienced mortgage broker ahead of time."
