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The cyclical sizzling of Australia’s property market has driven more and more Australians to embrace rentvesting.
Rentvesting isn’t new, it isn’t just for first-time investors, and it’s probably here to stay.
Homeloanexperts.com.au CEO Alan Hemmings said that rentvesting has become more popular and particularly common in hot property cycles.
Speaking to Smart Property Investment, he explained that rentvesting allows younger Australians to maintain their lifestyle and take advantage of the job opportunities that cities can provide, while also benefiting from adding an investment property to their portfolio.
“Rentvesting allows FHBs to take advantage of low interest rates and get on the property ladder, while still giving them the option to live in an area they love,” he explained.
“Many of us can’t afford to buy in suburbs that are in very desirable locations, but Australians are always keen to buy property and build wealth.”
Mr Hemmings refuted the idea that rentvesting is a fad or a new trend. Instead, “it’s something we see increase every time the property market starts accelerating”.
He said that while the popularity of rentvesting may wane when prices eventually fall, the strong outlook predicted by economists suggests that the trend will continue for some time.
“It’s important to note too, it isn’t just first home buyers who rentvest,” he added.
Regardless of the size of their portfolio, Mr Hemmings said it’s fairly sensible for many property investors to choose to live somewhere that they couldn’t afford to buy in.
That being said, he admitted that buying a property in a region that isn’t familiar to you isn’t without its challenges.
Asked what Australians looking to rentvest should keep in mind, Mr Hemmings emphasised the importance of doing your research and remembering that investing in property has additional costs beyond the initial outlay.
“Finding a strategy that suits their financial situation is key to taking advantage of the opportunity,” he said.
Mr Hemmings said that many of the difficulties with rentvesting are the same or similar to those of more typical approaches to property investment, “including obtaining and keeping good tenants, choosing the right suburb to suit their investment strategy and the difficulties of buying remotely if they’ve chosen a suburb outside of their local area”.
Still, “for buyers who have access to a deposit and are ready to buy, rentvesting gives them an achievable way to get on the property ladder”.
“Despite the fact property prices have already risen significantly, it seems likely this trend will continue for a while now, and rentvesting is a good way for buyers to get ahead of a hot market,” he said.
Property refers to either a tangible or intangible item that an individual or business has legal rights or ownership of, such as houses, cars, stocks or bond certificates.