Rentvesting is becoming more popular by the minute for the majority of would-be homebuyers and investors.
But Jason Grasso has been a proponent of the strategy for more than seven years now – and picked up nearly $1 million in profit along the way, too!
Jason is from a real estate family so perhaps he had his finger on the property pulse more than most, but even with his background, it’s still impressive that in midst of the GFC, he opted to invest in property at 23.
And, back then, he also knew that he didn’t want to live where he was going to invest, so he stayed renting in Melbourne’s eastern suburbs when he bought land in the outer suburbs.
He engaged a builder to construct a house on the block in a new residential estate and apart from some issues with the bank valuation, he was able to extract equity six months after completion to buy another property for his burgeoning portfolio.
His next property was a unit in an area of Melbourne where there was strong demand, he said.
“What I did with the apartment was to look at the actual demographic of who would buy it or rent it from me and what makes this one different from everything else that’s being built,” he says.
“I bought it in a complex which had seven apartments and the full footprint is 110 square metres. So it’s for people that are real the downsizers.
“It’s quite big and has a lot of light, so it ticks a lot of boxes.”
Two becomes five
That was a few years ago now and today Jason has a portfolio of five properties in Melbourne and Queensland, which is worth about $2 million.
But what’s most impressive is that Jason’s equity position is nearly $1 million – in just seven years and all the while was he was renting wherever he wanted to live at the time.
His next project is a townhouse development, which will provide him with even more equity.
But he has no intention of buy a home to live in. In fact, he’s never understood why so many people get tied down by a mortgage at all.
“Life is meant to be lived. It’s not supposed to keep you in a single place,” he says.
“I still like the freedom that rentvesting gives you. If I want to live in Melbourne, I can live in Melbourne. If I want to live in Queensland, I can live in Queensland. If I want to move overseas, I can do that.
“People don’t want to be 60km out from the city. People in their early 20s couldn’t think of anything worse.”
A numbers game
Jason has always been a numbers person, he says, which is what has underpinned his property investment journey thus far.
It’s also why he adopted rentvesting so early in the piece. He says when the gross return on a property in the area he wanted to live was only about 2.5 per cent, it made sense to rent there instead.
“So it makes sense to pay $450 to $500 in rent a week rather than pay $1 million for a townhouse,” he says.
“My mantra has always been rent where you want to live, buy where you want to invest. Now it has become a buzzword, but when I was in my early 20s it was very different.
“For me, I look at it and go ‘what are the numbers showing me?’ I treat property investment like a business. There is no emotional side to it to me because it’s a wealth creation vehicle.”
And Jason’s circle of friends are all coming around to the rentvesting idea, too.
“A number of my friends are rentvesting and are reaping the benefits because life changes,” he says.
“A lot of people dump their eggs into one basket.
“They’ll buy the place they live in and that’s pretty much it because it consumes all their money.
“I’m very much about people should be life-styling through property. What I mean is that you invest in property because it helps your lifestyle.”