When it comes to buying your first home, you have two options:

  1. Purchase your own home: buy your first property and you have a mortgage
  2. Purchase as a ‘rentvestor’: you continue to rent where you are and purchase an investment property in an affordable area.

The term ‘rentvestor’ was coined and trademarked by LJ Hooker as one of the key trends for millennials (i.e. under 30’s) for the buyer who loves their lifestyle of renting close work or the city and doesn’t want to relocate – but knows the importance of getting into the property market. Given they are priced out of their local area or the suburb they want to live in, an entry point into the investment property market is to buy within their budget.

This particular client was aged 25 and was renting near Cronulla and knew he needed to get into the market, but was priced out of this area.

The Situation

  • Wanted to buy in the area by his 30th birthday.
  • Moderate income of $55,000
  • Paying rent of $250 per week
  • Savings of $30,000

The Solution

  • We put his budget under a microscope and looked at ways he could add a bit more to his savings
  • We then worked out a strategy for him to invest using an investment property Buyers Agent. This focused on two key goals:
  1. Cash flow: how does he purchase a property which is neutrally or positively geared?
  2. Capital growth: by trusting a Buyers Agent to identify an area which was going to increase over the next five-year period, he would ensure he would have equity to draw out for his own purchase.

The Outcome

  • Apart from becoming a confident property investor, he has now also educated his friends on how they can get their foot in the door and not be intimidated about buying investment properties.
  • Within two months, he had gone from simply ‘renting without a plan’ to having his first investment property under his belt
  • He contributes regularly to his offset account, which is building his deposit for his first home purchase when he turns 30
  • His budget provides ‘play money’, which is his allocation for holidays, personal expenses, and weekend socialising
  • He has a strategy in place that will enable him to keep purchasing an investment property each year until he turns thirty, using the equity he has in his existing investment property/ies.

Why Isn’t Everyone Doing This?

  1. It takes commitment to achieve returns over the longer term. Some people want short-term gains rather than long-term rewards
  2. You need to have a strategy: simply saying “I want to buy an investment property” is not a strategy – that’s a goal. How long do you want to hold this for? When you will expect to sell this?
  3. They don’t trust experts: having an experienced Buyers Agent on your side will ensure you make the right purchase, rather than listening to friends and family who have never purchased investment properties but will happily give advice on where are the ‘hottest’ suburbs to buy.
  4. They don’t realise how easy it can actually be: they have gone to their bank, which said they don’t qualify for a loan. Now they feel dejected and throw their hands up in the air. It takes being proactive to seek out the answers you want and not giving up until you get the outcome you want.