Many young Australians, particularly those in the expensive major cities, are prioritising lifestyle over owning their own home – but this doesn't mean they can't still buy property.
In fact, many are realising that renting where they want to live and buying real estate elsewhere — or 'rentvesting' — allows them to have their cake and eat it too.
At the age of 25, Jazz Monzon bought an apartment in Perth, even though she was about to move to Sydney. Without the emotion, her property search was hyper focused; she just wanted somewhere that was low maintenance and cash flow positive.
"I bought an apartment that was very close to the CBD for a relatively good price," Ms Monzon said.
![](data:image/svg+xml,%3Csvg xmlns="http://www.w3.org/2000/svg" viewBox="0 0 800 450"%3E%3C/svg%3E)
Jazz Monzon bought an investment property when she was 25 rather than a first home. Picture: Supplied
For the past five years, her tenant has more than covered her mortgage, so last year while renting in Melbourne, Jazz decided to buy a second property.
Again, she wasn't after a home for herself. Her job as an energy trader has led to three big moves in eight years and she's keen to maintain flexibility.
"I was looking to buy within the $500,000 to $600,000 range and open to any location that would give me the most growth,” she said.
“I would have bought in Melbourne, but I don't think it offers growth prospects. There are a lot of apartments here."
She bought a near-new home with four bedrooms in Moreton Bay, about 40km north of Brisbane. It came with tenants who fully service her mortgage.
'Rentvesting' is the growing trend or people renting where they want to live and buying real estate elsewhere. Picture: Getty
Ms Monzon wants to live in her own home one day but for now, rentvesting suits her.
"I live very close to the Melbourne CBD, which is important for me for work and lifestyle purposes. Buying a house to live in doesn't make sense at this stage.
"I think rentvesting is definitely a good idea if you want to get into the property market but you don't have enough of a deposit [for the home you desire]."
Creating a future home deposit
Sydney buyer's agent Cameron Porter from Porter's House said he's seeing more and more young people choosing to rentvest as a way to crack the market and start acquiring equity.
"It's going to get them to their end goal a lot faster than having money just sitting in the bank," Mr Porter said.
"I'm seeing more people who will buy an investment with no intention to live in it but maybe sell it and use the growth from that to buy their family home in five or ten years' time.
"If someone had bought in Brisbane two years ago for $500,000, it could now be worth $700,000. They can sell that and then they've got a $200,000 deposit."
PropTrack economist Angus Moore said for first-home buyers, the deposit is often the biggest constraint on homeownership rather than borrowing capacity.
"Saving a 20% deposit is a burden for many households,” Mr Moore said. “So, lowering that hurdle by purchasing something a bit cheaper can be a good option for some people."
Rentvesting can allow young Aussies to get on the property ladder without sacrificing too much of their lifestyle. Picture: Getty
Rentvesting isn’t overly common for now, but Mr Moore expects it could become more so in expensive areas like Sydney and Melbourne.
"A lot of people value being an owner-occupier in Australia. But for some people, that sort of rentvesting approach can make a lot of sense.
"We might see a little bit more of that where it becomes more attractive for some people to buy further out of the city, rent it out and live closer to the city."
Flexibility, lifestyle and tax benefits
Many young people aren't too keen on a move to outer suburbia, Mr Porter said.
"They may want to get married, but they don't want the [suburban] family home – they want to live in an apartment close to restaurants and lifestyle amenities,” he said.
"Rentvesting is also about flexibility. Those in their 20s and 30s don't want to be tied to a property."
While rentvestors can live where they couldn't afford to buy, their property search can take them anywhere.
It just takes thorough research, Mr Porter said.
"It's knowing the end goal and doing enough research about the area and then property types within that area."
High property prices in major cities makes homeownership tricky. Picture: Getty
Some people know exactly where they want to buy, he added. It's where they want to settle down with their family — one day.
"People are doing more of that now, securing their family home and moving in later."
While rentvesting can provide buyers with flexibility, a potential rental income, and future capital gains, it also allows them to claim some investment expenses as tax deductions.
Plus, they may be able to borrow more for an investment property because some lenders will take into account the rental income.
Although, on the flip side, rentvestors aren't able to access the First Home Owners Grant or similar schemes, and may be liable for capital gains tax if they sell.
Financial literacy is vital
It's never been easier to gain financial knowledge and explore new ways of owning property, Mr Porter said.
"Twenty years ago, the people doing financial education had a product to sell or a vested interest. Now there are so many books, financial podcasts, and general advice that's easily accessible for free, which gives people confidence."
Jazz will buy her own home one day but for now is focusing on investing. Picture: Supplied
For Ms Monzon, she would like to buy her own home in a few years when she's made enough capital growth from her investment properties – and when she's more settled in one place.
In the meantime, she wants to keep building her portfolio with another residential property and potentially a commercial asset too.
And she wants to keep them all for the long term.
"Eventually I would like to be able to pay off some of them, and just have the passive income on those investment properties on top of my primary residence as well," she said.