Property investors priced out of the major metropolitans can look at rentvesting as a strategy to grow their capital without adding mortgage stress, a property investor has advised.
In a recent episode of The Smart Property Investment Show, local investor Stephen Kuper explained why he is avoiding buying in the area he lives in and decided to focus on steady growth in regional areas.
“I’m still not sold on buying a property in a major metropolitan area. I mean, I grew up in Wollongong and I’ve seen the property prices in my home city get ridiculous,” Mr Kuper said.
As a recent ME bank study noted, currently nearly 50 per cent of mortgage-holders are feeling financial discomfort due to large mortgages – something Mr Kuper would like to avoid.
“We’re constantly hearing that at least 50 per cent of Australian mortgage owners are in mortgage stress. And I’m sitting there thinking, ‘Bloody hell, we’re at the record-low interest rates, what’s going on?’”
“So, yes, I’m not sold on buying in the major metro areas yet. For me personally, I don’t see the return on it. And there’s a whole heap of permutations that go into making the assessment,” Mr Kuper noted.
He also highlighted the lack of space where he currently lives in the Inner-West of Sydney as a deterrent for investing in the metropolitan area.
“It’s a shoebox. You couldn’t swing a cat in it. So, you kind of sit there and go, ‘Is it worth it?’ You know, I couldn’t imagine spending that money in it not being a family home,” Mr Kuper said.
Instead by focusing on regional areas, Mr Kuper has been able to focus on “set-and-forget” properties as investments.
“There’s also having the places that I’ve acquired the long-term kind of ‘set-and-forget’, they’re going to just steadily increase in value. I’ve got really good property managers, and I’ve had a history of really, really good tenants so far, knock on wood.”
Finally, the property investor explained that by avoiding city purchases, he is able to achieve a personal goal of purchasing three properties by 30.
“I’m 29. I’m 30 in a couple of months and I’ve always had this plan that I wanted three investment properties by 30, so as long as I have it by 30 or before 31, I’m happy. I’ve kicked my goal,” Mr Kuper concluded.