In her CNBC article entitled “Rentvesting: The housing trend that’s getting millennials on the property ladder,” Karen Gilchrist recently shared some insight relating to the increase in popularity of this investment strategy amongst millennials.

Whilst young people may struggle to break into the property market in major cities such as Melbourne and Sydney, due to the rising dwelling values, rent-vesting provides millennials the opportunity to own a property, build their portfolio, without compromising on lifestyle. But as always, there are several factors to look out for when considering rent-vesting as an option.

Daniel Butkovich, Domain’s Advice Editor had the following tips to share. Do your sums, know how much you’ll require to settle the purchase, as well as how much you can afford to if the rent does not fully cover the mortgage repayments. Choose your location wisely. Identify the areas people want to live in, not necessarily those you would personally live in. Think gentrification, areas with high income and steady population growth. Consider adding value. Improving the value of a property purchase through renovation could see you pick up a bargain, and can definitely increase rental yield. And of course, have a safety net in place, because when unexpected costs such as repairs and maintenance come up, ensure you have funds set aside to cover these. Last but not least, think long term.

An investment should have a five to 10 year exit strategy in place, so being aware of market cycles is key to optimizing capital improvement. As the property market continues to surge forward in the coming months, undoubtedly more people will be looking at rentvesting as an option for them.