You may have heard of rentvesting, but ASPIRE Property Advisor Network Founder and Managing Director Richard Crabb said once-in-a-generation events had seen the rise of livevesting.
“Livevesting has resulted from an extraordinary confluence of factors which make it incredibly feasible under current circumstances to build a property portfolio from scratch,” he said.
Livevesting sees homebuyers who qualify for government subsidies select their initial property based on its long-term investment potential, rather than its suitability as a home.
Historically low interest rates for homebuyers are helping fuel the livevesting movement too.
“Due to COVID-19, we have reached a hallmark level of financial assistance from both the federal and state governments, particularly for first-time buyers looking to purchase new homes,” Mr Crabb said.
“This, combined with the exceptionally low interest rate environment, has resulted in the ability to acquire a new home with minimal deposit and a monthly loan repayment that’s well below rents in the same location.
“Livevesting buyers look at their home as a long-term investment and are prepared to move out after they’ve completed a minimum of 12 months’ residence if the opportunity presents.
“To successfully adopt livevesting, buyers must have a long-term investment strategy and choose the right sort of asset from the get-go.”
Mr Crabb said maximising returns from the strategy required the buyer and the property to meet certain criteria.
“Livevesting is most advantageous to first homebuyers who build or purchase a new home,” he said.
“After one year, they can choose when to move out of the property and retain it as their first portfolio asset, drawing on its potential capital gains and rent to help purchase their next home.
“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.”
Mr Crabb said when livevesting, buyers must also be smart about their home’s level of fit-out.
“Shoot for decent, low-maintenance, good-quality fittings, fixtures and finishes, and avoid builder upgrades that will tip into overcapitalisation,” he said.
Mr Crabb said these investors would also enjoy years of depreciation benefits in the future.
“Living in your investment first doesn’t disqualify you from claiming depreciation benefits in the future, and new homes are a great way to maximise this upside,” he said.