Chapter 1: What is RentVesting and how does it work?
It's The Real Estate Podcast, brought to you by Ray White, the largest real estate and property group in Australasia. And welcome to another episode of The Real Estate Podcast. We're talking to Emma Allen from Active Property Investing. Hey, Emma, welcome to The Real Estate Podcast. Thank you so much for having me, Craig. Good to get you on.
Did you manage a break over the Christmas New Year period? Oh, we sure did. It was really nice to get out and see some family that we hadn't seen for quite a while. And I think the kids enjoyed a bit of beach time as well.
Chapter 2: Why is it challenging for first home buyers in today's market?
I'll tell you a group of people who didn't have such a rosy Christmas this year and were probably soldiering on despite everyone else taking that much needed holiday. And they were the first home buyers. And it's such an excruciating time right now for them. unlike probably in any other time in buying history. And the stress of it all has a toll on somebody's health.
Chapter 3: What are the benefits of RentVesting compared to owning a home?
And I don't think this can be underestimated or understated. Someone's health with the demands of the property market running rampant
is real and has some consequences health wise so it's probably a great time to mention that if you know of somebody who's been missing out on house after house after house talk to them see how they're feeling let them vent off to you it's that pressure valve and that opportunity for them in a single conversation from a sympathetic ear that can make all the difference
But Emma, it's really tough, isn't it, for first home buyers? Oh, it is.
Chapter 4: How does one optimize their deposit while RentVesting?
It is. I think one of the greatest challenges is just watching property prices increase and it's really difficult to save a deposit, especially in our capital cities. It's becoming a bigger and bigger feat and people are trying really hard to accumulate those funds. But at the same time, the market is moving. So it's a moving goalpost when you're trying to get into the market.
So we're going to be talking about rent vesting. Some people might not even know what that term means, but the fundamental question first home buyers are asking themselves is, should I keep saving for that all-important deposit if I can't afford to buy the property I want right now?
It's a really tricky predicament to be in because there are two fundamental speeds that we would be looking at in this scenario. There's the speed to which someone is able to accumulate their deposit versus the speed at which the market is actually moving.
If someone has accumulated enough to purchase, but not necessarily in the location that they want to, then they may look at optimising that deposit in terms of investing.
Chapter 5: What mindset adjustments are needed for successful RentVesting?
and continuing to rent where they want to live. And not everyone is ready to make that decision. Sometimes families will think about, okay, well, if we continue saving, can we get into a place like Sydney? But if the market continues to move, then that deposit doesn't necessarily mean it's possible in the next couple of years. It's a difficult predicament to be in.
And I think one that a lot of people are trying to make a decision about, do we continue to save or do we actually take what we've got and make the most of it investing elsewhere? And it's probably a good point now to ask this question, and that is, how is rent vesting different to owning your own home?
I think when we own our own home, it's really based around the type of priorities and lifestyle that we want to have. And a lot of that can be dictated by where we work, you know, where children might go to school and other preferences that we might put beyond just the price point. So people often will pay extra if it means that they can have those choices and luxuries.
Chapter 6: How do market trends affect RentVesting decisions?
Whereas as a rent investor, the fundamental is to look at what is going to be feasible and viable and to make the most of what you have to work with in terms of your borrowing capacity and deposit. In practice, it usually means that people don't tie themselves to as big of a loan and they're really chewing off something around the
typically for our clients usually the five to eight hundred mark as opposed to a million to two million if they were trying to buy something as an owner occupier. So a rent investor will really take a first step into property at a much smaller level than someone who might be an owner occupier looking at upwards of a million dollars which is now the Sydney median.
You know, rentvesting in many ways, as you say, offers people the ability to live a lifestyle that they can't afford to buy into. But by living in a desired location, it offers them rentvesting outside of the suburb, the town or the city, and I guess even interstate, right? Yes, that's correct.
And perhaps people don't realise that there are more rent investors out there that we may have initially thought. We have helped a few families that are living in suburbs that have exclusive school zones and their children attend those schools and they have a portfolio of, you know, three, four, five properties as rent investors.
So it is actually a very viable option to be able to grow wealth but still live the lifestyle that you're looking for.
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Chapter 7: When is the right time to start investing in property?
And I guess that there's a required sort of attitude adjustment in terms of how you approach all of this. It's a very different mindset, I believe, when you're looking at investing in property versus the owner-occupier priorities. It really starts to dig into the sustainability and the financials of the investment.
There's multiple ways that we would look at to minimise risk and to also optimise success of that asset. But we have an opportunity to follow trends around different catalysts and movements of population. We really follow the economics behind the regions. And if you're investing as a sustainable investor, approach, then you would also look at striking a really strong balance of supply and demand.
So it's not about just investing anywhere. It's really about finding the most viable opportunities that you can to make the most of the money that you have. And I guess with rentvesting, having a look at rentvesting five to six years ago, completely different set of circumstances than what people are faced with now. Oh, absolutely.
Look, when I started in this industry, we were looking at medians of around the 300 mark was an easy entry point. That sweet spot's really increased quite a lot, especially in the last 12 months. But everything is relative.
So if five or six years ago, the entry price was a lot lower and they've made some money now, those locations are going to be relative to some of the bigger cities that you could have invested in at a much higher price point. So I think everything moves in cycles. And what we saw last year was quite unusual to see all the cities and regions increasing simultaneously.
Now they're really starting to fall back into their own individual patterns, which is more of a normal market for an investor or an owner-occupier. But when you say relative, it's only relative if you've been in the market. If you haven't, then that train has left the station and you're trying to jump aboard. Oh, you're absolutely right. That is the challenge.
One of the biggest questions people will ask us is when is it a good time to buy? I always believe that the best time is when you're actually willing and able to, because no matter what the market is doing, there are always opportunities. You just need to know where to look. The key is that people get started.
If that means setting a goal or to actually start accumulating or making a plan for their investments or their home, they need to just get started. Hey Emma, thank you so much for coming on to the Real Estate Podcast to explain rent vesting to us and some of the pros and the cons of it. My advice is always just to make a plan to get started. I think that's the important thing.
Rather than sitting and thinking about it, really start to plot your way into how you can get into the market. We connect you to the best real estate information across Australia. The Real Estate Podcast.
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