At first glance, rentvesting might seem counterintuitive. Why would you rent and pay off a mortgage at the same time? Wouldn’t it be simpler to just buy a home and live in it?
The reality is, there’s no one size fits all answer. The right choice depends on your budget, lifestyle, and life stage.
Maybe you’re single and keen to get on the property ladder, but your dream home is out of reach financially. Or perhaps you’ve found an amazing rental that suits your current lifestyle, and you’re not quite ready to settle down. You might love the convenience of inner city living now, knowing that one day you’ll want to move to a more family friendly suburb.
That’s where rentvesting can be a smart solution. It allows you to own an investment property which can generate income and build equity while you continue renting in a location that suits your lifestyle. In some cases, your investment property might even cover part or all of its expenses, and potentially help subsidise your rent.
You could end up spending a similar amount overall, whether you’re renting, buying, or doing both. But with rentvesting, you gain flexibility, lifestyle freedom, and a head start in the property market.
We’ve built an rentvesting calculator to help provide some insight on whether its a good strategy in the long term for you.
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1. Invest in affordable, high-growth areas to build long-term wealth
Rentvesting lets you purchase property in areas with strong capital growth potential, even if they’re not where you want to live. This strategic approach helps you grow your wealth faster by leveraging market trends and tapping into emerging suburbs before they become unaffordable.
2. Enter the property market sooner without waiting to afford your dream home
Buying your ideal home in a desirable location might take years of saving. Rentvesting provides a smart workaround by purchasing an investment property within your current budget, you can start building equity sooner, getting a foothold in the market without delay.
3. Access potential tax benefits such as depreciation and negative gearing
Owning an investment property opens the door to tax advantages that aren’t available with a primary residence. These may include claiming depreciation on the building and fixtures, as well as negative gearing benefits if the costs of owning the property exceed the rental income.
4. Diversify your financial strategy alongside shares or other investments
Property investment can complement other forms of wealth-building, like shares or superannuation. By spreading your risk across different asset classes, you create a more balanced and resilient financial plan for the future.
5. Live in the location you love without the pressure of buying there
Want to enjoy city living or beachside suburbs without a million-dollar mortgage? Rentvesting means you can live in a high-demand area that suits your lifestyle while owning a property elsewhere that fits your investment goals and budget.
6. The right investment property can cover its mortgage and expenses, potentially leaving you with extra income
If chosen wisely, your rental property can generate enough income to cover its mortgage, rates, insurance, and maintenance costs. In some cases, you might even have surplus cash flow, money you can reinvest, save, or put towards your rent in your preferred location.
1. Limited access to government assistance schemes
Most government grants and concessions—such as the First Home Owner Grant or stamp duty exemptions—are only available to buyers who plan to live in the property. As a rentvestor, you may miss out on these incentives unless you eventually move into the property and meet eligibility criteria.
2. Your rental payments don’t build your own equity
While you’re building equity in your investment property, the rent you pay to live elsewhere still goes to a landlord. Unlike paying off a mortgage on your own home, these rental payments don’t contribute to your long-term wealth or asset base.
3. Dual housing costs can be challenging to manage
Rentvesting involves balancing both a mortgage on your investment property and rent for your residence. On top of that, you’ll need to budget for landlord insurance, property management fees, maintenance, and other ownership costs—making good financial planning essential.
4. Capital gains tax (CGT) implications on sale
Unlike your primary residence, which is generally exempt from capital gains tax, your investment property will likely attract CGT when sold. This can take a sizable chunk out of your profits if not accounted for. It’s important to understand how CGT works and to factor it into your long-term strategy from the outset.
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Pros
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Cons
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Build equity over time
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Large upfront costs (deposit, stamp duty, fees)
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Greater stability and security
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Ongoing costs (rates, maintenance, insurance)
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Freedom to renovate or modify
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Harder and more expensive to move
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Potential for property value growth
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Long-term financial commitment
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Possible tax benefits (e.g., deductions on mortgage interest)
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Risk if property value drops
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Pros
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Cons
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More flexibility to move
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Rent payments don’t build equity
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Lower upfront costs
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Less stability, landlord can end lease
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No responsibility for major repairs or maintenance
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Limited control over the property (e.g., no renovations)
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Often cheaper week-to-week than mortgage repayments
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Rent can increase over time
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Can live in areas where buying might be too expensive
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Save a deposit – Start small with an affordable investment property
Work with experts – Engage an Acceptance Finance Mortgage Broker, Buyer’s Agent, and Property Manager
Focus on growth – Choose properties with strong yield, low vacancy, and future value
Reinvest – Use equity and savings from your first investment to grow your portfolio
Rentvesting offers the best of both worlds. You get to live where you love while taking steps to build long-term wealth. With the right guidance and strategy, it can be a powerful way to get ahead in the property market without compromising your lifestyle.
