All You Need To Know About The Concept Of Rentvestor
A trend that is picking up pace in Australia and can be a lesson for millennials worldwide is being a 'rentvestor'. So, who is a rentvestor? These are the new age investors who, based on their lifestyle, prefer to live on rent in city centres but invest in property in the suburbs as a part of their real estate investment. While their jobs and lifestyle force them to live in the city centre, their finances don't allow them to own a home of their own here. Hence, they live on rent and to build their real estate portfolio they invest in the suburbs, where the property is affordable.
A concept driven by affordability and lifestyle, according to a white paper published by LJ Hooker, an Australian real estate franchise, rentvestors is one of the key trends emerging among people under 30s investing in the country's real estate market. “This buyer is currently renting and love their lifestyle and do not want to relocate from the area where they are presently living,” the report says.
So, what are the basic traits of a rentvestor?
Lifestyle is a preference
For millennials, lifestyle is a preference. Work-life balance is what they look for. A tiring day at work, they would want to go out with friends or family for a dinner or just hang out at some exciting cafes. Whatever the case may be, the Gen Y wants to do it all in style. Going to the malls, shopping from best of the brands, hanging out at premium cafes and even show off all of it. They also take pride in the locality they live in, even if it is on rent. While these upmarket properties are far beyond their reach, they dream of a property of their own. So, while they prefer to live in the city centre or upmarket localities on rent, they want to own a property of their own. Where do they go? When it comes to buying property, this upmarket Gen Y opts for suburbs. Why? Because these emerging suburbs have affordable property. They don't mind that the locality is still developing, as they would continue to live in the city centre while this property in the suburb will be an investment.
Savings is tough
Given the lifestyle and the high rents they must be paying to live in the city centre, millennials are always struggling to save. Low on cash, this generation, hence, prefers investing in properties that require smaller deposits and costs them less over all. Affordability is the key here. But, here one would need to hire an agent to help make a guided decision because it is a decision that might backfire if not done right.
A flexible life
Millennials keep their careers and their leisure a priority. And, to achieve this, flexibility is one of the key things. In times when a good job opportunity might expect them to move from one city to another, the millennials prefer living on rent. It makes the move easy. Having an own home restricts them to a city and hence, lowers their opportunities.
They prefer a flexible housing option that allows them to move in or out easily.
Also read: Home-Buying Lessons That Millennials Teach
Investor and not homebuyers
The millennials who are rentvestors are not homebuyers who will move into that property later. They are buying a property purely for investment. Hence, the aim is to invest in affordable property, begin with one and add more and then earn profits. Many of them buy property in suburbs, rent it out and earn rental income. Still living on rent themselves, it gives them the flexibility to move whenever and wherever they want to.
Open to co-ownership
It has been observed that rentvestors are open to investing along with a friend or a family member. They prefer splitting costs and co-owning the property. But, it is advised for co-owners to be extra careful when investing. Before you begin, design an exit strategy and also, have a legal advisory in place. There are risks involved in co-ownership. What if your partner has different life goals or has a completely different financial setup? The aim is to be prepared for any unforeseen financial difficulty because in case either of you default on the equated monthly installments or EMIs, it would cost the other person a double EMI.
Also read: Did You Know You Can Rent Furniture Too?