Recently re-entered the rent market...
I have recently re-entered the rent market and intend to stay there for at least another 5-6 yrs.
I sold my last PPOR and am re-investing the proceeds into better yielding & CG potential IPs 7 am currently saving the difference between mortgage/rent which is about to be split between share portfolio and IP acquisition.
My previous PPOR equated to about $600 /wk in outgoings. I can get a comparable rental with outgoings of $400 /wk and use the $200/wk difference to fund 2xIPs (using my current capital etc...) I can also get approx $15K per annum increase in my net pay due now having deductible debt, compared to having a non-deductible PPOR loan. Having 2 rental incomes also allows better loan serviceability and therefore I can comfortably afford a higher LVR.
There is only one flaw in this plan, BUT, it can be mitigated to an extent. Preserving your capital (avoid CGT liabilities).... A few things I am doing or putting into practice in the immediate future to ensure the renting strategy works for me:
1. Use IP offset accounts to store surplus cash.
2. Ensure one or more IPs are suitable for as a future PPOR if circumstances/desires change.
3. Don't tie up all existing capital in IPs, preserve a decent amount in other asset classes. (I.e. share portfolio)
4. Continue with my somewhat nomadic career choice. This ensures periodic movement which offsets renting instability, new opportunities, seeing the world etc.... Besides, I actually enjoy what I do. (most days)
5. Return to a PPOR only when doing so becomes economically viable... Ie. own outright and still have the required passive income stream.
I acknowledge that for a lot of people, they tend to live, work, play in the same area for large durations (or their entire life). But for the rest of us, who tend to enjoy traveling, moving to different parts of the country or world, enjoy the challenges of changing career directions every few years to keep things fresh and exciting etc.. etc... Renting can actually be not only cost comparable, but also more beneficial from an asset building perspective.
Besides that, the $1M house I currently call home, would otherwise be a pipe dream!