You can live where you like and turn your home into equity, writes Angie Schiavone.
Just because you own a property doesn't mean you have to live in it. Some owners are becoming renters themselves, tempted by the big rents their own homes can achieve. They're finding they can rent something bigger a little further out while collecting a big return from their city pad.
Mari-Luise Agius, of Raine & Horne Glebe, says that at a time when the average income is less than what is needed to make mortgage repayments - particularly on property bought during the last boom - people have to look at ways of increasing the money coming in.
"Savvy people may opt to rent and use their asset to generate income and even create a surplus," she says, noting that inner-city rents rise more than those further out because of the appeal of the CBD.
Meanwhile, property owners in the outer suburbs are doing the opposite - letting their own properties and renting elsewhere in the interest of lifestyle. This can happen where a preferred suburb is too expensive. Buying in a cheaper suburb and renting in the area where you want to live can be a good first step towards eventually being able to own in your suburb of choice.
Ewan Morton, of Morton & Morton Crows Nest and Woolloomooloo, says: "It's a particularly good idea for young people who want to live in the city but can't afford [to buy there]."
THE LOGIC
A Marrickville renter, Belinda Maynard, has been a long-time champion of the own-and-rent combination. Maynard and her partner own an apartment at Meadowbank but rent it out, a decision made initially because they wanted to live closer to work.
Maynard isn't a novice, however. Five years ago, while renting in Kirribilli, she bought a house at The Entrance and let it. "I couldn't afford to buy in Kirribilli, but loved living there," she says.
Tania Holten, of Randwick, who owns at Erskineville, is another. She says she couldn't afford to buy in the eastern suburbs, but loves living close to the beach.
Morton says that many of his tenants who are also landlords are only in Sydney temporarily for work purposes and own a property interstate, where they eventually plan to return.
The flexibility of renting suits such short-term requirements perfectly, he says.
THE RETURN
"It's a good opportunity to save," says Maynard, who rents her Marrickville two-bedder for $310 per week. Admittedly, this is $40 more than the rental she gets for her older two-bedroom apartment at Meadowbank, but the difference, she says, is more than made up by savings in transport costs.
Agius says that smaller, inner-city units generally have the best rental return, so owners of such properties should consider this strategy.
The Australian Tax Office allows for tax deductions on some costs associated with buying and letting a property, including rates, interest, insurance premiums and property management fees.
