‘Don’t wait’: Why first-time rentvestor chose Brisbane over Sydney

A Sydney renter who bought in Brisbane to get a foot on the property ladder is already reaping the rewards. Here’s why.

Hayley McCoy has jumped on the rentvesting bandwagon, opting to buy in Brisbane and rent in Sydney.

She is currently renting a unit with two other housemates for $1100 in Rozelle in Sydney, but took the leap and bought a two-bedroom unit in Clayfield, an inner-city suburb in Brisbane, just to get on the property ladder.

“The plan was just to get my foot in the (property) door and I had grown up around Clayfield so I was comfortable investing there,” the 33-year-old said.

“I had looked around Sydney (to buy) but really, it just wasn’t achievable.”

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Pictured at her rental at Rozelle in Sydney is Hayley McCoy. Hayley has bought an apartment in Brisbane. Picture: Richard Dobson

Hayley, who works in corporate events, said she rented a one-bedroom unit when she first moved to Sydney about five years ago, but even then the cost was “a bit much”.

“I was lucky then as it wasn’t as hard (to find a rental) but now, I have friends who have found it very tough,” she said.

“I would say about 90 per cent of my friends are still renting, and my plan is to potentially move back to Brisbane ... that option is there.”

But for now, Hayley says rentvesting is working for her, and has urged first time buyers struggling to get off the rental merry-go-round to look outside of where they are living.

She pays just shy of $2500 a month in mortgage repayments and earns $510 a week in rent from her Brisbane unit.

In terms of rent, based on three tenants and a weekly total rent of $1100, rent costs Hayley about $1500 a month in Sydney.

Sydney has Australia’s most expensive real estate, with people leaving the city in droves. Photo - iStock

“I would get nothing in Sydney for what I bought my Clayfield unit for,” she said.

“So my suggestion would be to look to other areas.

“And don’t wait! Even when I bought, it was a bit more than what I wanted to spend but it has already gone up in value.

“The longer you wait, the harder it will be.”

WEEKEND TELEGRAPH 9TH AUGUST 2024Pictured at her rental at Rozelle in Sydney is Hayley McCoy.Hayley has bought an apartment in Brisbane to escape the Sydney property prices.Picture: Richard Dobson

The median house price in Rozelle is $2.24 million, while for units it is $1.42 million.

The median asking rent for houses is $1000 a week and $780 for units.

In Clayfield, the median house price is $1.9 million while for units, it is $573,500.

A two-bedroom unit in this Clayfield complex recently sold for $540,000

The median asking rent is $800 for houses and $525 for units, according to the latest REA Market Trends report.

The gross rental yield in Clayfiled is 2.19 per cent for houses and 4.76 per cent for units, while in Rozelle it is 2.32 per cent (houses) and 2.86 per cent (units).

And recent Mozo analysis has revealed that Hayley is not alone, with research showing a a dramatic shift in first home buyer behaviour, with a growing cohort choosing to invest rather than live in the first home they buy.

The research found that the first home investor cohort has grown by 25 per cent in five years, as buyers find alternative routes to get on the property ladder amid high rates and rising property prices.

It found that the number of first home investors making up the first home buyer market is growing in all states bar Victoria, with South Australia, the Northern Territory, Western Australia and Queensland all showing significant growth in the first half of 2024.

“The RBA’s decision to maintain the cash rate reflects ongoing caution in a volatile economic environment, but it does little to ease the strain on first home buyers,” Mozo’s personal finance expert Rachel Wastell said.

“While there’s no immediate increase in borrowing costs to new buyers like there are with mortgage holders, the ongoing high rate environment is having a significant impact on purchasing decisions.

“High rates and skyrocketing property prices mean first home buyers are finding homeownership increasingly out of reach, and so many are turning to rent-vesting as an alternative,”

But Ms Wastell said that if you are a first home buyer considering investing before buying a home to live in, and renting out your investment, you needed to weigh the potential risks and rewards.

“This is especially true in a high rate environment, and when investors don’t have access to some of the money saving benefits available to first home owner occupiers.

“Since the ABS started tracking first home investor data in 2019, there’s been a significant shift in the number of Aussies choosing to invest in their first property, rather than live in it.

“Soaring property prices and high rates are influencing new buyers’ strategies, and while lightyears away from dominating the first home buyer market, this small cohort of investors is growing.”

Originally published as ‘Don’t wait’: Why first-time rentvestor chose Brisbane over Sydney