What is Rentvesting?
How Does Rentvesting Work?
In order to understand how rentvesting works it’s important to first learn what the term actually means and what it relates to. When asking ‘what is rentvesting’, the easiest way to describe it would be by saying that it’s something that anyone can do – as long as they have the cash to cover the cost of a new home purchase to be rented out.
How does it work?
Once a home buyer purchases a new property, they can then choose to rent it out for, say, $1,000 per month. If the home is larger and offers more, then this amount can be increased, allowing the owner to receive a profit each month for as long as their property is rented.
Where will the landlord live?
This is where rentvesting gets really interesting. Although some people might own a separate home – others may not and it’s these people in specific that can rentvest. They can choose to rent their newly purchased property whilst renting another at a lower amount – allowing their monthly income to cover the cost of their own rent, whilst rewarding them with a profit.
And to make things even more appealing, there are even options to reclaim interest on the home loan used to purchase the property as tax deductions. This means that if you borrowed $500,000 to buy a new home for rental purposes, any interest that you are due to repay each month could be tax deductible – saving you money and allowing you to simply repay what you’ve borrowed instead of the interest rates on top.