In 2017, agency rent rolls are set to benefit from rents remaining relatively cheap in CBD locations and the rise of rentvesting, ensuring financial security for agencies struggling with lower listing numbers.
Pure Property Investment founder and director Paul Glossop says 2017 is the “year of the renter”.
“With property prices now above the $1 million mark in our largest city and rents at a relatively low price point, renting is forecast to become the accommodation of choice for the majority of Australians for the first time in history this year,” Mr Glossop said.
Speaking to RPM’s sister title, Smart Property Invesment, Mr Glossop laid out the pros of rentvesting and how investors, especially Millennials, can benefit from this strategy.
Rentvesting is an investment strategy employed, usually by younger investors, in CBD areas. Those who cannot afford to purchase property in the location they wish to live rent instead and purchase investment property where they can afford it, usually in a more rural location.
Agency rent rolls are benefitting from this as not only are investors renting out their investments, they’re also renting their principal place of residence. In the current property market – where home owners are reluctant to sell their property because they fear they may not be able to purchase another – many agencies are turning to their rent rolls for some much-needed financial security.
Taku Ekanayake is a Millennial investor who rentvests. He said he does it so he can live in his desired location and still able to build financial wealth through property.
“It gives me the flexibility of living where I want and the ability to move at any given time, for example, relocating overseas or interstate for work,” Mr Ekanayake told Smart Property Investment.
When he was growing up, the stigma of renting being ‘for the poor’ was instilled in him. He also saw home ownership as ‘the great Australian dream’.
However, without rentvesting, Mr Ekanayake would not be able to live in his chosen location and it would have taken him much longer to get on the property ladder.
Today, Mr Ekanayake has a respectable six-property portfolio and is spreading his knowledge of rentvesting to aspiring investors who want to build wealth in the same way.
As the market continues to tighten, agencies will continue to see rent rolls increase and property managers become increasingly important to a financially stable agency.