A survey of more than 700 home owners in Australia has found that “rentvesting” — buying an investment property while continuing to rent — is the most stressful situation for home owners, with 56 per cent of rentvestors giving it a stress rating of six out of 10 or higher.
The study, conducted by mortgage marketplace HashChing, also found that 49 per cent of rentvestors are contemplating refinancing their mortgages in the coming six to 12 months.
HashChing CEO Mandeep Sodhi attributed much of the stress to rentvestors underestimating the costs and responsibilities of being a landlord.
“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,” Mr Sodhi said.
“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.”
A State Custodian Home Loans study of more than 1,000 Australians conducted last year found that 74 per cent consider rentvesting a good strategy to get into the property market, with nearly a third of Gen Y respondents expressing their belief that rentvesting is cheaper than having an owner-occupier loan as it would allow them to have more disposable income.
More than a quarter of the respondents, or 26 per cent, of the State Custodian survey said that rentvesting enables buyers to live in a “high-quality” rental home, which would be out of their price range to buy, while still bringing in an income from elsewhere.
HashChing’s Mr Sodhi noted the importance of consulting a mortgage broker before becoming a rentvestor, saying that “it’s not a path for everyone” and requires expert analysis of a prospective borrower’s financial situation.