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Rentvesting: How this growing demographic fits into your off-the-plan property
Category : News

Owning a home is a national dream in Australia, however many young people are moving away from the idea of ownership in the traditional sense, preferring to rent because it suits their lifestyle. There is a growing demographic known as rentvestors; those who purchase a property in a suburban area and rent in central cities.

Great for young people

Rentvesting poses a number of benefits to those looking at making their first property purchase. By purchasing in suburban areas or smaller towns, this group of new buyers can get onto the property ladder sooner by investing in a house with a smaller deposit in a less competitive market. This allows them to build equity for a larger purchase later, and continue to rent in city centres, enabling them to be closer to the epicentres of work and culture.

If you’re buying off the plan there will be no shortage of tenants looking to rent your property.

Great for off-the-plan investors

Those investing in off the plan apartments in the central cities will be able to find tenants easily. As this segment of the market grows, so too will the demand for modern living spaces in centralised locations. There is a perceived paradigm shift in the way Australians prefer to live. Rather than the traditional multiple bedroom house on a quarter acre, many people now prefer to live in higher density dwellings because they have benefits that outweigh those offered in an owner occupier situation.

Firstly, there is a significant difference in cost. Using Sydney as an example, Domain’s rental report for December 2016 outlined that the median monthly rent was $2,080. Paired against an average monthly mortgage of around $2,900 for the same period, home loan repayments are significantly higher than monthly rental costs. Of course, there are variables to consider for both rental costs and mortgage repayments, but ultimately renting is far cheaper. It also takes the obligation of maintenance out of the equation as landlords will complete this type of work. Apartments with shared spaces of communal amenities are also a drawcard for young rentvestors.

With such a myriad of benefits to renting, off-the-plan investors won’t go wanting for tenants any time soon.

Great for property developers

Developers are also set to benefit from this trend, as Domain’s report suggested a difference of over $400,000 between median house ($1,123,991) and median unit ($711,256). This suggests it’s slightly easier to enter the property market with an off-the-plan purchase as it would be to buy an existing house. With more people looking at these types of properties, it bodes well for developers looking for investors in new projects.

For more information on buying off the plan contact 88 International today.

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