The property advice young Australians are increasingly ignoring

As the property boom continues, there is one saying that young Australians are still listening to. But it’s time to ignore it.

Brendon Hillsley is one of many young Australians choosing to skip the “stepping stone home” to reap the benefits of buying an investment property instead.

The 35-year-old is ignoring the old piece of advice that “rent money is dead money” as house prices continue to boom, putting his dream home well out of reach.

Lloyd Edge, director of buyers agency Aus Property Professionals, said the practice of rentvesting had become more popular in the past two or three years.

“People used to think ‘rent money is dead money’ but that has changed now,” he told news.com.au.

“I know people who never want to buy their own home and are happy to rent where they want to live, while buying investments on the side to set themselves up for the future.”

He said many first home buyers were struggling to get into the market as $700,000, which is the price that most government assistance tapers off, could not buy you much anymore, depending on where you were buying.

It’s especially tough in cities like Sydney and Melbourne where buying a property (let alone a house) close to the city is out of many young people’s budgets.

“You might want to live in the city or near the beach but may only be able to afford to buy in the western suburbs,” he said.

Some experts believe property prices will increase 17 per cent this year and March figures already show prices rising at the fastest rate in over 32 years.

Rather than resigning themselves to buying in a less desirable area, some homebuyers are choosing to purchase property in affordable areas while renting in an area they want to live.

Mr Hillsley is already enjoying the benefits of this approach.

After saving $40,000 for a deposit, the Sydney resident bought a three-bedroom house on a huge 1000sqm block of land in the regional city of Armidale for $229,000.

The sale went through around the start of the COVID-19 pandemic, and after spending $20,000 on a cosmetic renovation over three months, the house was valued early this year at $290,000.

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Brendon Hillsley decided to buy an investment property instead of a home to live in. Picture: Supplied.

Mr Hillsley is now planning on using $50,000 in equity to buy another property.

His Armidale property is also positively geared so the money he gets from rent ($1500 a month) more than covers his mortgage expenses of around $1000 a month, allowing him to save the rest.

Currently he lives in the north western suburb of Kellyville Ridge and wants to stay in the area, where his parents live, and which is close to his job in Bella Vista.

“To buy a house in the area is well over $1 million,” he told news.com.au. “Apartments are over $700,000 or $800,000.

“Down the track I want to settle down with my partner and buy our forever home.

“That’s probably eight to 10 years away and I don’t want to have a stepping stone home.”

While he could have continued to save, Mr Hillsley, who is a site operations manager for Woolworths, said he preferred to see his money working for him.

“After reading (Mr Edge’s book) Positively Geared, I wanted to make better use of my money,” he said.

“Rather than saving and not getting much interest, I decided to invest in property and grow my wealth.”

RELATED: Price growth in regional areas double that in capital cities

Brendon bought this three-bedroom home in Armidale for $229,000. Picture: Supplied.

He said Mr Edge helped him find his investment property and almost all the details were being taken care of by him.

In 10 years, Mr Hillsley is hoping to be earning a $100,000 passive income from his investment portfolio. At this point he may sell a couple of properties to fund the purchase of his dream home.

“I have got big plan, I want to make a decent passive income off my property portfolio and I want to have the house that I actually want to live in, rather than what I can afford now,” he said.

While Mr Hillsley is currently living with his parents, they will be downsizing their property soon and he will find somewhere to rent locally.

He said that the market was currently so hot at the moment that it makes even more sense to rentvest.

“I’m very happy with this decision, I haven’t come across any negatives yet,” he said.

“I really enjoy investing and I like renovating. It’s a side hustle and hobby that I enjoy.

“I can see my wealth growing so at this stage there are no negatives.”

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