When looking to purchase your first home, you often have to comprise between living close by to your workplace and sacrifice affordability or take on less of a financial burden but endure the hefty commute day and night. It would seem that it is now incredibly difficult to purchase a home that is both close and convenient yet won’t put the pressure on your disposal income. While housing out in the suburbs is more affordable, particularly over the last few years of surging prices around the city centres, the lifestyle doesn’t quite match. This is a particular concern for the lifestyle of millennials who want all the trappings of city life but would prefer not to be clamped down with a sizeable mortgage hanging over their head. Now, that’s a good dream.
When you consider that in many of the high growth suburbs, particularly in recent years, rental yields are sliding to record lows meaning that what we are paying in rent to live a life of convenience in the city is considerably less if we were to rent. Many young people are making this decision but that doesn’t mean they have to give their dreams of property ownership, in fact they have more opportunities to build wealth through property without having to live in a less desirable location.
Take Ms. Rossi, who recently spoke with news.com.au, being a shining example of the success of rentvesting, while still maintainable an enviable city life. Ms. Rossi, at just 34, owns four investment properties across three states, while living in a rental home in city. “There is no benefit for me in living in what I own” Ms. Rossi stated adding that her property investments created cash flow which creates opportunities for further investment while she can choose to live wherever she feels. Ms. Rossi also spoke with www.rentvesting.com.au and shared more about her story here.
Rentvesting has become a popular strategy with millennials in particular, allowing them the flexibility to live, work and travel wherever they desire while also being able to create financial security through their investments. Research by ME Bank had identified the rising trend of young Australian first home buyers, choosing to purchase an investment property while they rent their place of residence with up to 1 in 10 making this decision.
As our cities grow larger and our commutes became longer, the trend of rentvesting is likely to continue to rise, a thought echoed by Metropole Property CEO Michael Yardney who stated that people, millennials in particular, moved around a lot for work and preferred to live in suburbs they were often priced out of. ““Rentvesting suits the lifestyle of many millennials, allowing them flexibility in where they live, giving them the opportunity to travel and at the same time grow their wealth,”
While we often grew up with the attitude that rent money is dead money, we are now moving into a new age where renting where you live is a financially sound decision, as you continue to build wealth through investing, securing a financial future and enjoying the lifestyle you choose.