They call it rentvesting, a label coined by millennials as they find disruptive ways to climb the property ladder.
It is well-known that this generation demands convenience, instant purchases, and being able to have access to what they want when they want it. The same is starting to apply in property where the market is experiencing a surge in rental activity.
Marcél du Toit, CEO, Leadhome, says that while millennials have started to impact the property market significantly abroad, South Africa can expect to feel the effect within the next five years: “Millennials are opting to rent because it is typically less maintenance and offers a convenient lifestyle. This automatically changes what we would sell and the structure of the property itself. You would need a property that has some kind of mixed-use spaces for optimal customer engagement. Think work, life and entertainment all on the same real estate.”
Further to this, rentvesting has added additional complexity, as noted in Australia where millennials are opting to purchase and rent out properties in up-and-coming areas while choosing to live, and rent, in their preferred location.
Du Toit said that this is a good example of this new generation’s way of thinking: “They are not willing to compromise on what they want in terms of where they live, so they defer buying their own homes and leapfrog straight into a rental investment.”
Du Toit said that the upside is that these young professionals are acknowledging the attractiveness of property investment, even if they cannot compromise on their living standards.
“It is imperative that as property professionals we better understand these trends and demands, providing the right opportunities in both the buying and renting scenarios. Millennials like to live where they choose, while having an investment working for them and not feeling the emotional pressure to buy in a location and at a potentially unaffordable price.”
With a short-to-long term approach, millennials can arguably keep their investment for five years, save and then buy their dream property.
Naturally, rentvesting does not come without its challenges warned Du Toit: “Millennials are encouraged to consider all aspects such as price, location, timeframes, their role as landlord and a budget for incidentals and unexpected costs.”