Rentvesting in Australia: How to Buy an Investment Property While Renting Where You Live
Rentvesting means renting the home you actually want to live in, and buying an investment property somewhere you can afford. More Australian first home buyers are choosing this path as capital city prices keep climbing out of reach.
Is rentvesting a smart shortcut into the property market, or just a way to delay the real goal?
What is rentvesting?
Rentvesting is simple in concept. You keep renting in the suburb that suits your lifestyle, job or family, while you buy a property in a location you can actually afford. That property is rented out to a tenant, and the rent, plus any tax benefits, helps cover the mortgage.
You're not giving up on owning a home. You're just separating where you live from where you invest.
Why more first home buyers are doing it
The numbers tell the story. According to Westpac's Home Ownership Report, 54% of first home buyers are now considering rentvesting, up from the year before. In New South Wales, that figure jumps to 61%.
The lending data backs this up. New home loan commitments by first home buyers for investment purposes have grown sharply, with investor loans to first home buyers increasing at more than double the pace of owner occupier loans.
It's not hard to see why. Sydney's median dwelling value sits above $1.26 million. Melbourne's median house price is around $974,000. For a lot of younger Australians, buying in the suburb they actually want to live in just isn't realistic on a single income, or even two.
The upside of rentvesting
You get onto the property ladder sooner, often years sooner than saving for a home in an expensive suburb
You can buy in a market with stronger growth potential or better rental yield, rather than settling for what's affordable close to work
Rental income and interest deductions can offset some of the holding costs
You keep the lifestyle and location you want right now, instead of moving further out to buy
The trade offs to think through
Rentvesting isn't free of downsides, and it's worth going in with eyes open.
You lose access to first home owner grants and stamp duty concessions in most states, because those are tied to buying a home you'll live in
You won't get the main residence capital gains tax exemption on the investment property when you sell
You're still a renter where you live, which means less security of tenure and no control over rent increases
Land tax can apply to investment properties in some states, depending on value and location
If house prices keep sliding in the markets you're looking at, that's worth factoring in too. Our guide on Australia's spreading property downturn breaks down what falling prices mean for buyers right now.
How the negative gearing changes affect a rentvesting strategy
Negative gearing and capital gains tax rules are changing from 1 July 2027, and this matters if your rentvesting plan relies on tax benefits from an investment loan.
Properties bought before 12 May 2026 are grandfathered under the current rules. But if you're buying an investment property now to fund a rentvesting strategy, established properties purchased after that date will lose access to full negative gearing against your personal income from 1 July 2027. New builds stay exempt, so where you buy and what you buy both matter more than they used to.
Get the full detail in our guide on the negative gearing and CGT changes before you commit to a purchase.
How to structure your loan for rentvesting
A few things matter more than usual when your borrowing plan involves two separate housing costs, your rent and your mortgage.
Get pre-approval before you commit to anything. Lenders assess your rent as an ongoing expense alongside your new mortgage, so your borrowing power may be lower than you expect
Consider keeping your investment loan and any future owner occupier loan structured separately, so you have flexibility later if you decide to move into the investment property or sell it
Factor in the full cost of owning an investment property: property management fees, insurance, maintenance, vacancy periods and land tax, not just the mortgage repayment
Talk to a broker before you buy, not after. The right loan structure depends on your income, your deposit and your long term plan, and it's much easier to set up properly from the start than to fix later
Is rentvesting right for you?
It comes down to a few honest questions.
Are you happy renting for several more years while your investment builds equity?
Can your income comfortably support rent and a mortgage at the same time, including a buffer for rate rises?
Have you researched the investment location properly, or are you buying based on price alone?
Does your long term plan involve eventually living in the property, selling it, or holding it indefinitely?
There's no universal right answer. For some buyers, rentvesting is the fastest realistic way into the market. For others, saving longer for a home to live in makes more sense. A broker can run the numbers both ways so you're deciding with real figures, not guesswork.
We also like that a rentvesting strategy often means buying in a regional or outer suburb market, and a portion of the profit from every loan we settle goes to the Australian Wildlife Conservancy. So if your investment property ends up somewhere closer to the bush than the city, you're in good company.
Ready to Look Into Rentvesting?
If you want to know whether rentvesting stacks up for your situation, get in touch. We'll walk through your numbers, your borrowing power and your options before you commit to anything.