Latest / The Follio Property Podcast / Why Rentvesting Beats Home Ownership in 2026 | The Australian Housing Strategy by Property Experts

Transcript

Why Rentvesting Beats Home Ownership in 2026 | The Australian Housing Strategy by Property Experts · The Follio Property Podcast

• 0:01
  This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required. Compatibility and availability varies 18+.
• 0:26
  When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen and helps reach people with the right skills, certifications and more. Spend less time searching and more time actually interviewing candidates who check all your boxes. Listeners of this show will get a $75 sponsored job credit at Indeed.com slash podcast. That's Indeed.com slash podcast. Terms and conditions apply. Need a hiring hero? This is a job for Indeed Sponsored Jobs.
• 0:56
  Cracking into property market has never been harder. Now new data shows a surge in so-called rent besting.
• 1:02
  Rent investing could be a better strategy than getting your PPO out first. Getting this wrong, it can set you back a half a decade. You know, if this goes wrong, all chips are out. You're going to be waiting another three or five years to reload and go again. What sort of assets should a first-time investor be looking at? The ability for capital growth quickly into the portfolio. We've had a lot of clients that we've been able to generate equity very quickly into that first asset, which has enabled their second and third purchase in a faster concession than they probably expected.
• 1:26
  What about regional assets? That's my concern. Social media, they're going to push you firstly to regionals, push you to house and land packages. They're going to get you in to buy high-density apartments that are very easy to buy. And typically, the supply and demand fundamentals are out of whack. And you need to do an aggressive accumulation phase. I much prefer location quality over asset quality. Get that right. And if it does well, it's going to set you up.
• 1:50
  You're listening to the Folio Property Podcast. I'm Rhys Bettle and I'm here each week with my co-host Lachlan De La Hunty. Lachlan, we did it. We've launched the National Investment Report. There's going to be a link in the show notes. Scan the QR code if you're watching it on YouTube as well on the TV. A lot of people do this. Reviews are coming in thick and fast, but we need more five-star reviews on the podcast.
• 2:11
  Yeah, and any comments around what you want to see more or less of any sort of comments to help navigate who we get on and the direction we take. Absolutely. And we do listen to those comments. So today's episode actually is off the back of some comments in YouTube, some feedback we've received from some of our listeners. And that was actually we did an episode with yourself where you kind of unpacked your portfolio and what your strategies and plans are in 2026.
• 2:36
  Big feedback we got was there was a lot of listeners out there that aren't in the same situation as yourself. So they really wanted to touch on maybe a first-time investor or a second-time investor. What are some strategies they can implement in 2026?
• 2:48
  And I think the good takeaway there, if you are listening and there's specific things you want us to talk about on this podcast, please put in the comments now what you want to hear more of, what topics you want us to cover because we're here to serve you. So if it's something that you want to know more about or we want me to take a deep dive into, happy to. So please comment.
• 3:09
  Absolutely. Okay, Lachlan, you speak on the podcast frequently about strategies or phases when it comes to building a property portfolio. Knowing the target market here, first time investor or a second time investor, what sort of phase or strategy should they be in at the moment?
• 3:23
  will likely be a rent-vestor, first-home buyer. So naturally, they're going to be in very much an aggressive accumulation phase. So that's probably the difference from a divestor or a debt reduction strategy or a seasoned investor, probably taking a slightly different approach to their portfolio. So I think that's what we're discussing, right? Someone that's trying to accumulate and build equity quickly.
• 3:50
  Yep. And what, I mean, black and white, what is an accumulation phase? You obviously explained that there, but is there one phase or is there elements to that accumulation phase throughout the portfolio? No, through a life cycle of property investing, you will go through various accumulation phases. So the three accumulation phases that one might go through is typically between, say, one and three purchases. They'll typically be a primary place of residence, and then you'll continue to accumulate with a slightly different strategy.
• 4:14
  And then there'll likely be an upgrade property, typically between your sort of 35 and 50s, where you'll either enter a debt reduction strategy or a third phase of accumulation. Yeah. What about rent vesting? You did mention that earlier on in the piece. Would an accumulation phase look different for a rent vester versus someone who is in their PPOR at the moment?
• 4:35
  Definitely. Definitely. And the reason for that is because your debt structuring, because obviously you're paying off your home as a mortgage, and so your exposure to risk appetite, cash flow becomes very, very different to those that are in a rent investing strategy where you're not as committed to paying. You can always increase or decrease your rent depending on how you want to change your lifestyle.
• 4:59
  So there's certainly different strategies when you're looking at a rent investor versus someone who owns their home and is investing because cash flow becomes more important in that second bucket, those who own their home, than it is when you're a rent investor. Yeah. The Aussie dream's always been to own your home, but it's definitely shifted with the rise of the rent investor.
• 5:18
  That could be down to affordability issues. You know, if I look at the East Coast where that's quite prominent. But is it purely a lifestyle choice why you'd go down one particular route? Or do you think in this day and age where the property prices are, how hard it is to get on the property ladder, that rent vesting could be a better accumulation strategy than getting your PPO out first?
• 5:39
  Yeah, it comes back probably to a podcast we did a couple of weeks ago, Rhys, where you've got to, what is your strategy? So what's your life goals? What's happening in your personal world? Because, agree, there's a lot of noise out there at the moment saying that people should rent vests forever and that's how you build it. It's the best.
• 5:54
  tax outcome, et cetera. And it's all BS in my eyes because buying a home is a huge part of your property journey and forms part of your strategy. Typically, the average Australian will buy between two and three homes because you progressively want to live somewhere else and you get a larger family and things change. So buying a home is typically always going to be part of a person's portfolio.
• 6:16
  But certainly in the situations where you live and where we're advising to invest are completely out of proportion. And that was very evident, for instance, in markets in Perth between 2012 and 2018 when the market was extremely soft and there was certainly no green shoots.
• 6:36
  It was very difficult for Perth people at that time to justify purchasing their home as part of their largest strategy when there was other markets around Australia that were certainly representing far better value from an investment point of view in terms of the data that was coming through.
• 6:51
  You've got to take into account personal scenario, your availability to debt because understand when you buy a home, that chews up a large part of your serviceability because you're not getting a rental income. That's where rent vestings become really, really topical. Rent vesting and trusts to increase your serviceability so you accumulate far more aggressively in terms of your exposure, number of investments in your portfolio. And then the third is aligning potentially your personal goals around what markets are moving at what points in the cycle.
• 7:22
  This episode is brought to you by Accenture. When your advertising operations fall out of sync, everything else follows. Spotify and Accenture are working together to reinvent the rhythm of ad sales, using automation, analytics, and smarter workflows to simplify campaign delivery and access better data across the business. The result? Less time spent on operations, more time connecting brands with the moments and fandoms that matter most. Learn more at Accenture.com slash Spotify.
• 7:51
  That's fascinating because I think when we, you know, when we first started talking about this subject, I thought it was really about capital growth. But from what you're saying there, it is important to kind of free up that cash flow in order to keep going again and again and again.
• 8:02
  Yeah, cash flow is the core of any portfolio. If you don't have it, you're not going to be able to service and serviceability is what allows you to take on more debt. So again, like I said previously, those in a rent-vesting strategy can probably be more aggressive on capital growth in comparison to cash flow than those who've got a primary place of residence. Cash flow typically is more tight or serviceability becomes certainly more difficult when you've got your home and debt tied up in that.
• 8:31
  Okay, let's go and give a bit of an example, I guess, of a first-time investor or even a second-time investor. We constantly talk on the podcast about blue-chip assets, long-term compounding growth are the premium assets you want to be getting into.
• 8:46
  Looking at the property prices now across the country, it's going to be hard for a first-time investor to get access to some of those assets or maybe be limited to the types of assets they can get. So maybe it might only be a unit in a particular area, they can't afford a house. With that in mind, with the prices at the moment, what sort of assets should a first-time investor be looking at?
• 9:05
  Yeah, first-time investor who's trying to build a portfolio, what's key is the ability for capital growth quickly into the portfolio without taking on a large amount of risk because the problem is with your first asset, it's really the cornerstone in your portfolio. Yeah.
• 9:21
  If it does well, it's going to set you up. And we've had a lot of clients recently that we've been able to generate equity very quickly into that first asset, which has enabled their second and third purchase to probably occur in a faster concession than they probably expected and probably what we forecasted because they've bought so well. But you can't expose them to high levels of risk because you get that wrong for a first-time investor. And we've seen it, we've spoken about it in our personal world, getting this wrong in the wrong market.