A rentvestor’s guide: The perfect places to rent and invest

By ensuring rentvestors are paying less than home owners, Jeremy Sheppard, LocationScore director of research, said investors can make sure they “make the most of every single dollar”.

“Out of the thousands of property markets Australia-wide, what are the chances that where you live is the best place to invest in property right now? Highly unlikely!” Mr Sheppard said.

“Smart rentvestors are renting for lifestyle and investing for growth to beat home owners in the financial stakes.

“By using this research as a starting point, people with lower incomes who choose to rentvest can identify properties that will help them get ahead of those who already own homes in expensive markets.”

New South Wales

Renting

Investing

For renting, Sydney offers many locations with high prices but low yields, meaning that expensive property is cheaper to rent in than owner-occupiers pay off. 

“For around $500 per week in rent, a couple can enjoy all the beachfront benefits of a one-bedroom unit in this suburb, and still come out ahead by investing elsewhere,” Mr Sheppard said.

Meanwhile, Mr Sheppard tips Wallacia is the best location to invest into, with a unit typically seeing a 4.45 per cent gross return and is also primed for growth with additional infrastructure and services.

Victoria

Renting

Investing

For those who love the beach, units in Victoria’s McKinnon are an excellent choice with the nearby Brighton Beach and commercial strip.

“With units only providing just over 3 per cent gross return, tenants are definitely coming out ahead of owners,” Mr Sheppard said.

Then for investing, suburbs past the inner urban ring should be considered, such as Millgrove.

“Millgrove housing priced around $330,000 has been achieving yields close to 5 per cent,” said Mr Sheppard.

“This small town 62 kilometres east of Melbourne is achieving great returns and, according to our analysis, has terrific prospects for growth in the coming three-to-five years.”

Queensland

Renting

Investing

Woolloongabba topped the Queensland list for renting into, located close to the CBD and is what Mr Sheppard described as “one of the most exciting urban gentrification zones there is”.

“And with an abundance of accommodation options, there’s competition to attract tenants which is keeping rent prices reasonable," he said.

In terms of investing, Rochedale South offers the best opportunity, as Mr Sheppard pointed out units priced under $300,000 can offer returns of over 5.7 per cent.

South Australia

Renting

Investing

Despite South Australia already offering affordable property, rentvestors can still find a way to save money by living in St Clair while investing in Happy Valley.

“For example, St Clair is located just 8.5 kilometres north-west of the Adelaide CBD and has easy access to town and the water via rail,” said Mr Sheppard.

“Landlords are paying $564,000 for houses and achieving just 3.76 per cent return in an area we deem likely to see only modest value growth over the next five years.

“Tenants in St Clair could look to invest in Happy Valley where their $288,000 unit will show just under 6 per cent yield – and our analysis shows they can look forward to some strong price gains in the coming years, too.”

Western Australia

Renting

Investing

Rentvesting in Western Australia is less likely to be as viable when compared to other states, but is still possible, Mr Sheppard said, with Highgate offering the best rent for the lifestyle.

“Highgate … [has] housing priced around the $700,000 to $750,000 mark, but owners are lucky to see more than 3.2 per cent on their investment,” he said.

“By simply renting in [Higate], which [is] essentially part of this vibrant city’s CBD, tenants can enjoy all the lifestyle pros without the ownership cons.”

This should then be combined with investing into Bibra Lake, with $300,000 units offer over 5 per cent return.

“Our analysis also shows Bibra Lake to be a hot prospect for solid value gains between now and 2023,” Mr Sheppard said.

Tasmania

Renting

Investing

It is no surprise that Tasmania saw great growth last year, with many experts claiming it to be the best state for growth last year and one to watch this year.

“Now Tasmania has been ‘rediscovered’ by investors, some residents in the current climate would best suit renting than buying,” Mr Sheppard said.

“Take Opossum Bay where houses now see a median price of $456,454. This is a beautiful, private beach side community that gazes back in Hobart’s direction.

“Owners here are likely to see limited gains in the coming years and while the 4.22 per cent yield sounds fine, investors can do better.”

Paired with investing in Glenorchy, which has units selling for under $230,00 and returns of nearly 6.7 per cent, investors still have an opportunity to enter this hot market.

“Given the suburb’s easy access to the Hobart CBD and major roadways, investors have the option of allowing a tenant help service the debt while their property value grows,” Mr Sheppard said.