So who is the modern-day RentvestorTM
Since the Rentvestor™ trend emerged in 2013, LJ Hooker has been keenly tracking the evolution of this market demographic.
Rentvesting was originally defined as a savvy way for young first time buyers to get into the market; they live in a rented property while acting as a landlord of a property where other tenants help subsidise their mortgage repayments. Rentvestors typically purchase properties in more affordable areas, often where they grew up or have family members.
Over the last few years, LJ Hooker has seen rentvesting shift to be a popular investment strategy for an array of age groups and demographics, not just first time buyers.
LJ Hooker Head of Research, Mathew Tiller said the rentvestor trend evolved as a result of strong capital city growth, a more mobile and transient workforce and the preference for lifestyle over location.
“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’,” said Mr Tiller. “However, our latest research shows there are now two clear types of rentvestors.
“The first type is those who are driven by lifestyle choices and affordability constraints and the second category which is driven by work, study or other personal circumstances.
“There has been an evolution of the rentvestor not only by age bracket but also income.”
LJ Hooker’s own research now shows:
56% of rentvestors are aged between 35 and 55 years;
38% have a household income less than $100,000 per annum;
43% have become a rentvestor due to work or study.
These figures show rentvesting is no longer for the young professional or university student. Indeed, it’s fast becoming part of the Australian dream for many.
So what’s the outlook for the renvestor?
The number of rentvestors could increase for many reasons:
Capital city price growth: Strong growth recently seen in Sydney and Melbourne has created affordability constraints for renters in the inner city who want to buy in the same location, pushing them towards becoming rentvestors.
Mobility: As the mining and resource sectors slow, this workforce will move to other parts of the country and into different industries. History has shown these workers initially rent in the new locations and continue to hold either a family home or investment property in another part of the country.