Buying property isn't easy for those who aren't yet on the ladder. Prices are still on the up in most regions around the country, and there is little to suggest that they will drop soon. Sadly, a recent Finder survey found that almost half of renters said they had all but given up on their chances of buying a home. Will it ever get easier?
Here at REIN Group, we sincerely hope so. However, high prices and competition from investors does not have to stop anyone from getting on the ladder. Rentvestment is an exciting new trend that entails renting your primary residence and buying elsewhere as an investment.
It is a unique strategy that just might work for you – let's have a closer look.
1. Live where you want to
Property in the capital cities is going to set you back a hefty sum. In fact, CoreLogic RP Data's Monthly Indices show that across the five biggest Australian cities (Sydney, Melbourne, Adelaide, Perth and Brisbane), the average property's going to cost you around $800,000.
For those with deep pockets, or other properties to use as leverage, that wont be a problem, but for fledgling investors, these prices can present an insurmountable challenge. Rentvesting solves that problem by allowing you to rent close to work, friends, family and your favourite cafes and bars, while buying property further out of the city where property is far more affordable.
2. Choose your property based on growth prospects
It doesn't matter whether or not you find the area charming or convenient, all that matters is pure potential for profit.
When buying an investment property instead of a home, your priorities change. It doesn't matter whether or not you find the area charming or convenient, all that matters is pure potential for profit and capital gains.
This means that you can look to buy only in areas with promising growth prospects in order to maximize the return on your investment. A recent Hotspotting report stated that such areas include Birkdale in Brisbane, Ashmore on the Gold Coast or Bellara in Moreton Bay.
You're not limited by location either – with rentvestment you can buy anywhere in Australia to find a solid return.
3. Buy for a higher rental yield
As a new property investor you may not have the generous cash flow of more seasoned pros. That means ideally you'll need to find a property with rental income that covers most of your mortgage and other investment expenses. That way you'll be paying off your mortgage and enjoying the benefits of investment without living on a shoestring budget.
Rentvesting allows you to do just that, searching to find a property with a return that suits your financial situation and cash flow requirements. If you choose wisely and have a solid investment strategy in place, investing doesn't have to be difficult or stressful.
4. Find a way into the market
Buying your first investment property is always going to be the hardest. After you're on the ladder you'll have equity to leverage into more property, and you'll never have to save for a deposit again.
It's no surprise that a June 2016 First Home Buyers Australia survey found that buyers thought their biggest challenges were both saving for a deposit, and working with housing unaffordability Rentvestment allows you to get creative when approaching these problems, buying in more affordable areas to reduce both your deposit and your mortgage repayments.
If you've given up on owning an investment property this strategy could be your way in. For more advice on residential property investment, and to work on a comprehensive strategy to realise your property aspirations – get in touch with the experienced team at REIN Group today.