10 suburbs under $600K primed for rentvesting

(Photo: Melinda Young Stuart/flickr)

With younger Australians increasingly being priced out of the most desirable suburbs, it’s no wonder many are looking to ‘rentvest’ to not only enjoy a sophisticated inner-city or coastal lifestyle, but also progress their property investment goals.

Rentvesting is a relatively simple concept; buyers purchase in a location they can afford, then lease that property out to cover the mortgage and continue renting in their suburb of choice.

It’s also becoming a common investment strategy for young Australians, against a backdrop of Australian home values rising by more than 20 per cent in the year to the end of September and by much more in some of the most sought-after lifestyle locations.

The latest data from the Australian Bureau of Statistics showed 342,300 Australians were rentvesting in the 2017-18 financial year.

A more recent report from the Property Investment Professionals of Australia suggested that number was likely to rise, with 54 per cent of respondents to its 2021 survey saying they would consider rentvesting as an investment strategy.

Well Home Loans chief executive Scott Spencer said there were several compelling reasons to consider rentvesting, as buyers seek to balance emotional concerns about liveability and security with practical concerns around financial returns.

Research commissioned by Well Home Loans found 21 areas where buyers with a budget of up to $600,000 may be considering buying a unit, but would likely be better off renting.

At the same time, the research, which was conducted by Suburbtrends, found 10 areas where houses were in a similar or lesser price range to those unit markets, while also delivering the same or superior rental yields.

Mr Spencer said for those looking for future capital growth, those units and apartments may not be the best choice.

“Many unit markets in the inner and middle rings of Australia’s major capital cities have high vacancy rates,” he said.

“That’s good news for tenants, but bad news for investors.

Read more at API Magazine.