The rise and rise of rentvesting

What is rentvesting and how is it impacting the Boroondara rental market?

Property prices in many parts of Australia continue to rise, and with little reprieve in sight, first home buyers have been finding alternative methods of achieving the great Australian dream.

Enter ‘rentvesting’: the practice of purchasing a property in a more affordable, often outer suburban location while continuing to rent in an amenity-rich, inner locality. Rentvesting offers first home buyers a lower market entry price and a steady rental income without sacrificing lifestyle, convenience or easy access to work.

While making your first property purchase an investment may seem unconventional, a recent Mortgage Choice survey underscores the popularity of the approach: at least one third of investors in 2016 were first-time buyers who had not yet bought their own home.

This statistic is less surprising in light of REIV data for the December 2016 quarter, which reveals median prices in desirable locations are well out of reach of many first home owners. This includes Boroondara, where suburbs such as Balwyn and Camberwell boast median house prices over $2 million.

"While such prices are out of reach for most first home buyers, Boroondara is an ideal rental choice for rentvesters," explains General Manager of Jellis Craig Boroondara Property Management, Sophie Lyon.

“A well serviced area, Boroondara is close to the CBD, features a lively cafe scene right on your doorstep and also offers access to numerous private schools and universities.”

Significant tax benefits, reduced moving costs and the prospect of a considerable return in the future only add weight to rentvesting soon becoming the norm among first time and young home owners.

As the practice of rentvesting continues to rise, Boroondara is well positioned to experience the best of both worlds.

"The rentvesting trend is good news for those who already own property in Boroondara or those considering buying an investment property in the area," says Sophie.

“Increasing numbers of rentvesters will help sustain demand for rental properties in Boroondara while the enduring appeal of the area and subsequent rising property prices will help drive continued capital growth.”

"As a blue chip and always sought-after locality, Boroondara is ideal for young families, singles and couples alike, leaving landlords to benefit from an ongoing interest in both renting and purchasing property in the area.”