The soaring markets of Sydney and Melbourne have demonstrated that our property market is showing few signs of slowing down. The pressures placed on first home buyers have resulted in Rentvesters growing in numbers over the last few years as a viable solution to the affordability crisis. While rentvestors have existed for decades prior, it is only in 2017 that we have seen this strategy become more popular, particularly with Gen Y as they struggle to make inroads for homeownership.
This article posted on Domain.com.au dubbed 2017 the year of the rentvestor, those who continue to rent in an inner-city location that they would otherwise be unable to afford if they were to purchase the property they live in yet invest in a location elsewhere that is compatible with their budget.
The article went on further to explain that while rentvesting can help those who may not have the budget for an inner-city purchase, it is not as straightforward as purchasing an outer suburb property and enjoy the capital gains while paying rent. Rentvesting requires due diligence and research prior to making a decision. Lack of which can cause further financial pressures if capital is placed in a poor investment.
Its s important to consider the location you are investing in rather than one which is just affordable. Tenants move to a location that is desirable and suits their needs. Having a property which is close to transport, good schools, employment and amenities will be far more successful in terms of yield, capital gains and lower vacancy if it appeals to the average tenant seeking residence in the area.
It is best to invest in a market that is familiar to you or seek advice from an unbiased agent such as a buyer’s agent who would be able to perform the research for you and relaying the results to you to help you make a decision. There are many factors that determine whether an investment is viable and suitable for your current situation.
While there many opportunities for investors interstate, there are also associated expenses which you may not be able to offset. For this reason, it is best to have a property manager local to the area who will able to handle the affairs of the property on your behalf. This will help you in reducing the travel time associated with carrying out maintenance, inspections and collecting of the rental income.
With more attention being focused on rentvesting than ever before, the benefits can be quite clear. This doesn’t mean it will work for everyone under every circumstance. As with any investment, a certain amount of due diligence is required for optimal results and for those who are looking to get started with the strategy, it is highly recommended that they seek advice from a professional familiar with the strategy before making any decisions, at least until they get the hang of things and become more comfortable with the strategy.
Peter MastroianniPeter Mastroianni is a property finance expert and the co-founder of Loans Only, specialising in investment lending. He is the author of two top-selling real estate books and host of The Rentvesting Podcast. Peter is passionate about supporting the next generation of investors rethink the traditional home ownership model. He does this by championing the ‘Rentvesting’ strategy through www.rentvesting.com.au.
- Next Generation: Young, Brave and (Financially) Free July 7, 2020
- Are You Forgetting your Child’s Future? July 7, 2020
- The Solution to the Affordability Crisis is to Change Our Attitude Towards Property July 7, 2020
- Why Keeping Australia’s Real Estate Prices Growing Could Be the Solution Rather than the Problem July 7, 2020
- Are Property Investors the Antithesis Holding First Home Buyers Back from Achieving the Australian Dream? July 7, 2020