The Evolution of the Rentvestor
What are Rentvestors and why is this trend on the rise?
Since the emergence of the Rentvestor™ trend in 2013 this burgeoning investment strategy has quickly grown to represent savvy investors of all ages and demographics, according to Australia’s number one real estate network, LJ Hooker.
In 2013, LJ Hooker identified a rapidly emerging trend in the real estate market; the rise of the rentvestor (the term is a registered trademark of LJ Hooker). A rentvestor is defined as someone currently living, as a tenant, in a rented property but who also is a landlord of a property that they own and rent out.
LJ Hooker Head of Research, Mathew Tiller said the trend has evolved as an investment strategy to encompass a broader geographic and demographic make-up driven by strong capital city growth, a more mobile and transit workforce and the preference for lifestyle over location.
“Interestingly when LJ Hooker first identified the rentvestor trend we described it as a ‘young couple in their late 20’s or early 30’s who love their lifestyle and don’t want to relocate from where they were renting’, however our latest research shows that there are now two clear types of rentvestors,” he said.
“The first category being those who are driven by lifestyle choices and affordability constraints and the second category who are driven by work, study or other personal circumstances.
“There has been an evolution of the rentvestor not only by age bracket but also income.”
In fact, LJ Hooker data found that 56 percent of rentvestors are now aged between 35 and 55 years, and 38 percent have a household income less than $100,000 per annum, while a total of 43 percent have become a rentvestor due to work or study.
“Contrary to common perceptions, that a rentvestor is a young professional or university student; our survey found that a diverse age group rentvest,” Mr Tiller said.
“Rentvesting has fast become a common part of the Australian real estate market.”
Looking forward Mr Tiler said there were a number of key factors which should see the number of rentvestors grow.
“The past year has seen rental growth, in most capital city markets, remain soft. This has made renting a more attractive and affordable option and will potentially make “rentvesting” a more budget friendly investment strategy,” he said.
“The recent strong price growth seen in Sydney and Melbourne has brought with it affordability constraints for those currently renting in the inner city and wanting to buy in the same location, and in turn pushed them towards becoming a rentvestor.
“Also, the increasing mobility of our workforce will also see rentvestor numbers rise. For example, as the mining and resource sectors slow, this workforce will move to other parts of the country and into different industries as opportunities present themselves. They will initially rent in the new locations and continue to hold either a family home or investment property in another part of the state or country.”