Rentvesting: A Smart Way to Get into the Australian Property Market

For many Australians, saving for a home deposit while keeping up with rising property prices can feel out of reach. But what if there was a way to own property sooner while still living where you love? That’s where rentvesting comes in. 

Rentvesting is an increasingly popular property investment strategy that allows first-home buyers to enter the market sooner without sacrificing lifestyle. 

Let’s explore what rentvesting is, how it works, and whether it’s the right choice for you. 

Rentvesting explained: Renting where you want to live while owning an investment property elsewhere.

What is Rentvesting? 

Rentvesting is a strategy where you rent a home in your preferred location while owning an investment property elsewhere. 

For many first-home buyers, purchasing property in capital cities like Sydney, Melbourne, or Brisbane is unaffordable. Instead of waiting years to save a large home deposit, rentvesting allows you to buy in a more affordable location and rent it out while continuing to live where it suits you. 

Some rentvestors also live with family while leasing their investment property, using rental income to cover mortgage repayments and build home equity faster. 

With rentvesting, you become both a tenant and a landlord at the same time! 

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Pros and Cons of Rentvesting 

Rentvesting has benefits and challenges, so it’s important to weigh them up before making a decision.

✅ Pros:	❌ Cons:
Live where you want – Rent in your ideal location without the financial strain of purchasing there.	Still a renter – You won’t own the place you live in and may face rent increases or lease restrictions.
Enter the property market sooner – Buying in a more affordable regional area or outer suburbs means you can start building home equity faster.	Additional costs – Property management fees, maintenance expenses, and potential vacancy periods can impact cash flow.
Rental income offsets costs – Your tenants contribute to your mortgage repayments, reducing your financial burden.	No first-home buyer grants – To access First Home Owner Grants (FHOG) and stamp duty concessions, you must live in the property for at least 12 months.
Tax benefits – Investment properties may offer tax deductions on expenses such as interest payments, depreciation, and maintenance (ATO).	Capital loss potential - Property values don’t always go up. If the market declines, you could lose equity, especially if you sell during a downturn.
Capital growth potential – If you buy in a high-growth area, your property’s value can increase over time, boosting your wealth.

Another happy homeowner! Our team supports first-home buyers every step of the way—right through to settlement.

How Does Rentvesting Work?  

Here is a realistic scenario:  

Let’s say Emma wants to buy a home in Sydney, but with median property prices at $1.2 million, she can’t afford the 20% deposit of $240,000 required to avoid Lenders Mortgage Insurance (LMI). 

Instead of waiting years to save, she chooses to rentvest. 

💰 Emma’s Rentvesting Strategy: 

• Buys an investment property in Brisbane for $550,000 

• Pays a 10% deposit: $55,000 plus $20,000 in stamp duty & costs 

• Takes out a mortgage of $495,000 at 6% interest over 30 years 

• Rents out the property for $2,200 per month, giving her $26,400 in annual rental income 

• Her loan repayments are $2,970 per month ($35,640 per year). Click here to calculate your loan repayments.  

Meanwhile, Emma continues renting in Sydney, keeping her job and lifestyle. 

 

💡 How this benefits Emma in 5 years:  

 ✔ Her Brisbane property grows in value by an average of 4% per year, reaching $670,000

 ✔ She builds $120,000 in equity (new value of the property – loan amount on the property) which she can use as a deposit for her future home (dependent on the loan to value ratio) Use My Finance Agent app to see your equity.  

✔ She avoids missing out on property market growth while living where she wants 

 Why Does Rentvesting Work? 

1️⃣ Property prices continue to rise – If Emma had waited 5 years to buy in Sydney, she might need to save for a more expensive home. 

📍 Curious about property values? Check out our Free Property Reports.

 2️⃣ Her investment property helps pay for itself – Rental income covers a portion of her mortgage repayments. 

3️⃣ She builds equity faster – Instead of saving for a deposit, she uses capital growth to fund her future home purchase. 

Disclaimer: please note this is a hypothetical scenario and may not be applicable to you.  

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Tax Benefits of Rentvesting 

One of the biggest advantages of owning an investment property is the tax benefits. However, keep in mind that if you decide to move into your investment property, you will no longer be eligible for these deductions. 

According to the Australian Taxation Office (ATO), as a property investor, you can claim tax deductions on: 

✔ Water and council rates 

✔ Land taxes 

✔ Home insurance 

✔ Property management fees 

✔ Repairs and maintenance 

✔ Advertising costs to find tenants 

✔ Depreciation of assets (wear and tear on the property)

 ✔ Interest on your mortgage repayments 

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Is Rentvesting Right for You? 

Rentvesting can be a powerful strategy to enter the property market sooner, but it’s not for everyone. A successful rentvesting plan requires careful financial planning, smart property selection, and long-term strategy. We can:  

✅ Assess your numbers – Calculate your borrowing power, deposit requirements, and potential rental returns. 

✅ Look at all financial factors – Including loan repayments, interest rates, tax benefits, and rental cash flow. 

✅ Plan for the future – Understand how capital growth, equity, and property investment strategies fit into your long-term goals. 

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