Monday 05 Mar 2018
Millennials could be forgiven for throwing in the towel when it comes to property investment but in the last couple of years they have started jumping into the market in creative ways that previous generations never thought of.
The main strategy for Gen Y is “rentvesting”, where they purchase an affordable property but live and rent elsewhere. A smart tactic, as many millennials believe that a property’s capital growth will far outweigh interest earned in the bank or saving for longer where they can end up chasing a rising market and miss the boat altogether. Building equity this way can assist them in the long run and create an easier path to fund a deposit on their first live in home.
Another option, albeit with some risk, is the purchase of shares, and millennials now make up about 30% of CommSec accounts. Young investors today use multiple sources of information to educate themselves including mobile technology that were not available to previous generations, giving them confidence to invest more frequently in shares than ever before.
Option three and what we are seeing widely in the marketplace today are parents helping their children get onto the property ladder. Jumping into a loan with a parent acting as a guarantor is another way to increase your LVR and enable millennials to borrow up to 95% without paying mortgage insurance.