What is rentvesting?

9 February 2026 - 2 min read

Key takeaways from this article

• Rentvesting could help first home buyers enter the property market sooner by buying an investment property in a more affordable area while renting where they want to live.
• This strategy can offer flexibility and potential capital growth benefits, but can also come with ongoing costs, market risks, and landlord responsibilities.
• Whether rentvesting is right for you depends on your financial position, goals, and risk tolerance, so professional advice is essential before getting started.

What is rentvesting and how does it work?

Recent housing affordability figures show how difficult it has become for first home buyers to enter the market. Rising property prices, a tight rental market, unpredictable interest rates, and increased living costs have pushed the average deposit beyond the reach of many Australians. 

The November 2025 Cotality Housing Affordability Report shows that the median house price in Australia’s major cities is more than eight times the average household income, and that more than a decade is needed to save a standard 20% deposit in most capital cities. It also shows that Australian home values have risen by 47.3 per cent since the COVID lockdowns in 2020. 

As a result, first home buyers are increasingly looking beyond traditional home ownership models to get a foothold in the property market. This is where rentvesting comes in.

Rentvesting is a property strategy where you rent the home you live in while owning an investment property elsewhere. Rather than buying a home in the area where you want to live, such as the inner city, you buy an investment property in a different, more affordable area and rent it out to tenants.

For example, say that buying an apartment in the suburb you currently live in costs you $3550 per month in mortgage repayments, but renting a similar home in the same area would mean you pay rent of $1850 each month.

If you rented instead of buying, this would potentially leave you with $1700 extra cash each month to put towards an investment property deposit or investment property loan in another area, where it may be cheaper to secure a property.

Where to buy? 

Choosing the right location is critical to successful rentvesting. Many rentvestors look beyond capital city centres to areas with stronger affordability and growth potential. 

Some property buyers may consider regional hubs with strong employment opportunities and infrastructure investment. Others may prefer outer metropolitan suburbs with improving transport access, or rural towns experiencing population growth.

It’s important to research local market conditions or seek professional advice rather than relying on general investment property trends.

The potential pros of rentvesting

Rentvesting could offer several potential advantages, particularly for first home buyers who want to build wealth, but who might be priced out of their preferred areas. These might include: 

• A foothold in the property market: Rentvesting allows buyers to get started in the property market sooner, rather than waiting years to afford a home and build equity in a high-priced suburb.
• Flexibility in living arrangements: By choosing to live where you want, you can stay close to work, family, schools, or city lifestyle amenities without being locked into one location, and without being stuck only living where you can afford to buy. 
• Potential capital gains: If your investment property increases in value, you could make a profit when you sell, particularly if the investment property value grows significantly over time.

The potential cons of rentvesting

While rentvesting might be appealing, it’s not without potential drawbacks. Some cons may include:

• Ongoing home ownership costs for the property you own: Owning an investment property still comes with costs, such as mortgage repayments, maintenance costs, council rates, insurance, strata fees, and repairs, all of which must be budgeted for.
• Less control over your living situation: As a renter, you may face rent increases, lease non-renewals, or restrictions on making changes to your home.
• Risk of limited or no capital growth: At the same time, there is no guarantee the property will increase in value. If the value of your investment property decreases, your returns could be limited or result in losses.
• First Home Buyer incentives: Rentvesting may affect eligibility for first property schemes such as the First Home Owner Grant, depending on state rules and whether the property is considered an owner-occupied home.

Rentvesting costs to consider 

There will be upfront costs involved when buying an investment property, including stamp duty and legal costs. Ongoing costs may include council rates, strata fees and continued maintenance. There may also be changes to interest rates or loan repayments, periods of vacancy, plus the risk that the rental income alone doesn’t cover mortgage repayments and expenses. All of these should be factored in as part of your investment property strategy.

Before rentvesting, it’s important to speak with a tax adviser, financial planner or accountant. They can help you understand your potential tax implications and deductions, assess cash flow and affordability, and develop an investment property strategy. 

Are you ready to be a landlord?

Being a landlord comes with responsibilities. You’ll need to manage tenants, maintenance requests, compliance requirements, and financial obligations. While a property manager or leasing agent can handle day-to-day tasks (you may need to pay fees for this), ultimate responsibility still sits with you as the owner.

Ask yourself whether you’re comfortable with ongoing expenses, market uncertainty, and long-term investment horizons. 

To sum up 

Rentvesting can be a viable pathway into the property market, particularly for first home buyers who value lifestyle flexibility or are priced out of their preferred locations. However, it's not a one-size-fits-all approach and is all about your investment goals.

With careful planning, professional advice, and a clear understanding of the risks and benefits, rentvesting may be a strategic step toward building your property portfolio and achieving your property goals.