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What is Rent-vesting and is it Right for You?

What is Rent-vesting and is it Right for You?

Nook Admin – December 1, 2021

Transcript of the video


Hi guys, welcome. I'm John from Nook, the Philippines first mortgage broker. We will help you find the right home loan and get it approved by a major bank for absolutely no charge.

In this video we will discuss what rent-vesting is and why it might be a good option for you.

So let's get started.....

What is Rent-vesting?

First up....what is rent-vesting exactly?

Rent-vesting is a term used for people that rent where they want to live and buy a property where they can afford to buy one and then rent it out to a tenant to help pay for the home loan.

This can be a good idea for those people who are wanting to get started in the property market without sacrificing their lifestyle or where they want to live.

How Does it Work?

But how does it work exactly?

Let's say you wanted to live close to work in Metro Manila where the home loan repayments for your preferred type of property was, say, P42,000 per month.

Whereas the rent for a similar property in that area was only P28,000 per month. That would leave you with P14,000 per month spare to invest.

Rent-vesting works best when there is a noticeable difference between the cost to buy verses renting in the same area.

For this strategy to work you must invest the monthly savings rather than spend it in order to build wealth.

Why Do People Rent-vest?

So why do people rent-vest?

Let's say you want to live in the inner city but don't have the borrowing power to purchase a property in that area. Well rent-vesting might be an option for you because you then get the best of both worlds.

You can afford to rent in an area that suits your lifestyle while putting your money to work by purchasing a property elsewhere and renting it out.

You could actually purchase a property anywhere in the Philippines, even if it's in different location from where you are currently living.

The rental income should largely cover your home loan repayments each month. And you still get to live where you want.

Pro's to Rent-vesting

There are pros and cons with rent-vesting. The most obvious benefit of it is lifestyle.

Rent-vesting allows you to live in your preferred location that might be too expensive to buy into.

Another benefit is flexibility. Selling a home that you live in to move somewhere else can be difficult. Whereas Rent-vesting means you can live where you want and move around without a problem.

Con's to Rent-investing

But there are downsides to rent-vesting such as being asked to move out of the property by the landlord. This can give uncertainty for tenants.

It's also harder to personalise your home like you could if you owned it yourself. You don't own the property and therefore you don't have the flexibility that property owners have the luxury of.

So What's the Best Option?

So what is the best option? This will depend on your financial goals, financial situation and personal circumstances.

When comparing options between buying or rent-vesting it is absolutely vital you seek the advice of an accountant or financial professional so they can help you understand the longterm impact of any decision.


So that it for today.

If you're considering buying a property or need a housing loan and want to understand your financing options, contact Nook today.

Our team can help you get pre-qualified in just a few minutes and all our of services are free for home loan borrowers.

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If you got value from this video today, please share it with just one person you know. We would appreciate that.

Thanks for joining us. And see you next time.