Vic tenants turn renting on its head

A pair of Werribee tenants have revealed their easy-to-follow plan to escape the rental trap on the path to their dream home.

Scarlett Sykes and Ben Slater are renting in Melbourne while building a house as their second investment property. Picture: Wayne Taylor.

Victorian tenants are turning themselves into landlords as they look for a way to swap renting for owning a home mortgage free.

Scarlett Sykes and Ben Slater are rent-vesting as a way to strengthen their family’s future.

The approach involves renting where you want to live, or can afford to, while investing in a home that suits your budget – and leasing it out.

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The pair are renting a home in Melbourne’s western suburbs where they reside with daughter, Ottilie, 3 years old, and son Ziggy, eight months.

An engineer, Mr Slater bought his first investment property in Queensland just before meeting Ms Skyes.

Together, they have also signed a contract to build a four-bedroom Caroline Springs house they plan to rent out in the future.

Mr Slater said they aimed to eventually sell both homes, buy their “dream house” and hopefully live debt-free.

Before purchasing their second investment property they sought advice from Melbourne-based Eda Property founder Anissa Cavallo, who provides real estate selection and consulting services.

Eda Property founder Anissa Cavallo works with many rent-vestors, including single people, to develop their property portfolios. Pictures: Supplied.

Ms Skyes said the prospect of rent-vesting could be “extremely overwhelming” so seeking guidance was a good idea for anyone interested in doing so.

With the recent interest rate rises adding pressure to their mortgages, Mr Slater said the tax breaks which come from investing in a new property made “rent-vesting” possible for their young family.

“You sort of rely on those tax breaks to be able to meet costs throughout the year, lots of people would struggle without them,” Mr Slater said.

Investing in a newly-built house can come with tax benefits. Picture: Supplied.

Ms Cavallo said many rent-vestors leased an inner-city home while investing in a property located in an outer suburb or busy regional hub.

“They are often not in a position where they could afford property otherwise,” she said.

Ms Cavallo added it was important for rent-vestors to buy in an area with strong growth in its employed population, where many people would be looking to rent.

“The question to ask is, ‘Where do I get the most bang for my buck?’” she said.

Ms Cavallo said many rent-vestors lived in inner-city suburbs while investing in outer urban and regional areas.

However, she said it was important to remember everyone came to rent-vesting with their own individual set of circumstances.

“I say to clients all the time: ‘If you came to me with $2m to invest, I’d be presenting you with a different area to someone who came to me with $400,000 to invest’,” she said.

Rent-vesting in newly-constructed properties was also important, to take advantage of the tax breaks on offer, Ms Cavallo added.

“But there can be a lot of hidden costs in a new property,” she said.

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Originally published as Vic tenants turn renting on its head