Have you ever considered being a 'rent-investor'?

You may be wondering what exactly a 'rent-investor' is. Perhaps you've heard the term being used before or seen it floating around. It has certainly become increasingly widespread as the property markets in Australia have soared to new heights.

The property markets in Australia have soared to new heights

The Australian Bureau of Statistics (ABS) found that capital-city values rose nearly 10 per cent over the 12 months to June 2015, with Sydney alone posting a whopping 18.9 per cent.

These substantial rises that have made the market harder to break into, especially for first home buyers, have given way to a different kind of rise - that of the rent-investor.

Essentially, people rent a home where they would like to live but can't afford to buy, while investing in rental properties in more affordable areas. Figures from the ABS reflect this, as the annual value of lending to investors in Australia more than doubled over the four years to August 2015.

Here are a few reasons you should consider seeing your mortgage broker about an investment loan rather than owner-occupier finance.

1. More affordable

While you may be pining for that inner-city abode, it's likely that your funds won't stretch that far.

The ABS affirms that average first home loans in Australia are around $340,000, which is in direct conflict with recent findings from CoreLogic RP Data that reveal most capital cities in Australia have median prices over $400,000.

While there can be some anomalies, generally the closer you get to a major city hub the more expensive real estate in Australia will be. Hence, the reason for looking homes for sale further out from the city and rent investing.

You will be able to use the rental yields to help cover the costs of maintenance and your home loan repayments, while renting in your desired location and taking advantage of any capital gains.

2. Tax benefits

Property investment has a number of benefits to the real estate market and the overall economy, which is why the Australian Taxation Office (ATO) has allowed for a plethora of deductions. These tax benefits have added to the appeal of rent investing, with some of the expenses you can claim including:

• Insurance
• Borrowing fees and expenses
• Depreciating assets
• Property agent fees and commission
• Pest control
• Repairs and maintenance
• Council rates
• Advertising for tenants

In a nutshell, if you find yourself spending money related to owning rental properties, you will be able to claim a tax deduction on that expense. This goes as far as to include all the minor details, like the costs of travelling to and from your property or stationery and postage.

3. More leverage

Rent investing can provide a solution for when you find yourself unable to afford property for sale in your dream suburb. Your first home loan may not be enough, but the Australian Securities and Investments Commission asserts that you will be in a much stronger position if you have a profitable investment property that is creating equity - they don't call it the property ladder for nothing!

They don't call it the property ladder for nothing!

If you're wondering exactly what equity is, when you sell your property and pay off your home loan, it is the money you have left. You can calculate your equity by subtracting your remaining mortgage from your property's value.

For example, if after two years of being a rent investor, your property is valued at $400,000 while your investment loan is down to $100,000, you are the proud owner of $300,000 in equity.

Equipped with this nest egg, you can rush off to see your mortgage broker to enquire about your options regarding your dream piece of real estate in Australia to live in and call your own.

If you're struggling to get a foothold in the property market, rent investing could be your boost up.