The investing strategy leading Canberrans to paying off their mortgages sooner

There’s nothing worse than finally feeling confident talking about the property market … then someone throws out a term like “rentvesting” and you have to slink away. Let us help you out.

If you’ve not come across it before, rentvesting is a practice that sees you buy an investment property but continue to rent elsewhere. Sounds pretty simple, but how does it work?

This strategy works best when a property is purchased in an affordable area with a dependable and high rental yield. Then owners are free to choose where to live based upon personal preferences, often owing to location and lifestyle benefits.

Real estate agent Emma Baker from InStyle says it’s a fantastic option for investors, as well as first-home buyers, as they aren’t pressured to sacrifice their lifestyle in order to get into the property market.

“If you choose to rentvest, you’re not missing out on purchasing and obtaining assets. People are drawn to high-end amenities, but they also come with a high price tag. This way, you can still enjoy both,” she said.

According to Domain’s latest Rental Price Report, Chifley is Canberra’s top performing suburb for unit rental yields. Owners of investment properties in Chifley can expect a weekly rental income of $400 and 7.1 per cent rental yield, representing 11.1 per cent year-on-year growth.

It’s closely followed by Curtin, Macquarie, Coombs and Mawson, which round out the top five and offer comparable rental yields.

Top 5 Canberra suburbs with highest rental yields for units:

When it comes to houses, Crace boasts the strongest rental yield for established homes at 5.6 per cent, representing 6.5 per cent year-on-year growth.

Following Crace, the outer Belconnen suburbs of Casey, Macgregor, Melba and Ngunnawal are tied, with 5.1 per cent rental yield.

Top 5 Canberra suburbs with highest rental yields for houses:

The unit market outperformed houses, in terms of rental yields, and this is likely due to ideal location close to highly desired amenities and services.

“People often rent in areas that make sense for them. Being close to schools, hospitals and your workplace is a huge reason why rentvesting makes sense for a lot of people,” Baker said.

This heavily influenced Dylan Jacobs’ decision to purchase an off-the-plan townhouse in Bruce in the upcoming Rockwell development.

The Sydney investor purchased a three-bedroom, three-bathroom and two-garage townhouse, which he identified as appealing to a broad range of renters.

“Rockwell is near the University of Canberra, the Australian Institute of Sport, Calvery Hospital, gyms, Belconnen and the city. Being so close to all these locations with great access to public transport results in ease of renting and future rental growth,” Jacobs said.

Bruce enjoys a unit rental yield of 6.5 per cent, representing 5 per cent year-on-year growth and making it an astute location to purchase investment properties.

“There’s a level of trust in the Bruce area,” Baker added.

“It’s established and absorbs a lot of students, professionals and families that want space without the hassle of high maintenance.”

The completion date for Rockwell is December 2020. The development also offers a guaranteed 12-month 8 per cent rental yield, meaning investors can be assured of their rental return.

“When I saw the rental yield potential in Rockwell, I realised I could maintain my current lifestyle while creating additional wealth in my property portfolio,” Jacobs said.