RG 076 – Rentvesting your way to financial freedom with Peter Mastroianni
- Peter has been involved in real estate for over 13 years
- He is the founder of the Buyers Guide.
- He’s a participant of PIPA
Nuts and Bolts
Peter is a resident Aussie who’s been involved in real estate for over 13 years. He is the founder of the buyers guild and the founder of his company Rentvesting. He’s also an experienced finance broker and a participant of the non-profit Property Investment Professionals of Australia PIPA. After he graduated from college having studied business and finance, his parents encouraged him to get involved in real estate while he was young and in retrospect he’s glad they were so forceful as prices have significantly increased since then. After he bought his first property he leveraged it to buy further properties whilst also working full time as a broker. His first purchase was made for AUD$143,500 and was a 4 bed 1 bath unit, and it’s now worth between $600-650,000.
The property market in Australia has experienced a similar boom to the likes of the US and Europe over the last 13 years with property prices increasing faster than wages, especially in large cities. An affordable property in Sydney or Brisbane 13 years ago is now worth millions and Sydney has seen an increase in property value of 75%. Local Sydney residents are unlikely to be able to afford a property as it would take nearly 8 years to save for a deposit without accounting for inflation. The main concentration of people in Australia are around the edges of the country and so this causes a steep demand for land and therefore increasing prices. Also in the last 13 years interest rates have been low causing lots of investors to buy up land as investment rather than the stock market.
Peter came up with the idea of Rentvesting as a portmanteau of renting and investing. This arose from the pressure on affordability in city housing and people not wanting to live miles out of town just to be able to afford something. Rentvesting allows you to live where to want and invest where you can afford. The investing doesn’t need to be in property, this could be in stocks, entrepreneurship etc. For example a person could be paying $2000 in Sydney at a commutable distance to the main districts earning an average income of $80,000. If they invest in a property asset in Brisbane for $500-$600,000 this will generate about $400-$450 per week. The money acquired here would cover the interest on the loan for the purchase and there’s a tax break for individuals owning investment property if they’re treating the property like a business. For example expenses for running the property are tax deductable. In this example the person’s income is $80,000 plus $20-100,000 annual rental income and $25,000 outgoings on interest and taxes, maintenance, water etc. All deductions can be taken off the total income so instead of being taxed on $100,000 you would only be taxed on $75,000.