The ins and outs of rentvesting
Written and accurate as at: Jul 14, 2025 Current Stats & Facts
The path to property ownership isn’t always a straight line. With soaring prices in major cities and the cost of living pushing Aussies’ savings goals further and further back, many people are exploring alternative ways to get on the property ladder.
For a growing number, rentvesting has emerged as an attractive option. This is where you continue to rent in your preferred location while owning an investment property somewhere more affordable. But are there any downsides to rentvesting, and how do you know if it’s right for you?
How does it work?
In Aussie real estate, there are some general truths that tend to hold up no matter which state or territory you live in. The average unit costs less than the average house, and properties of both types usually get cheaper the further out you venture from the CBD.
For hopeful buyers who can't afford to buy close to the city, this poses a problem. Do you sacrifice the lifestyle you’re used to and move to an outer suburb or regional area, or do you put your property ownership plans on hold and keep renting in the inner city?
Rentvesting solves this by giving you the best of both worlds. Certain areas offer more affordable entry points into the property market, and by turning your attention to these you can slash the time needed to save a deposit. Meanwhile, you can continue to rent in the areas that you love and suit your needs.
But like any investment strategy, the benefits will need to be weighed up against the risks and potential drawbacks. Here’s a quick rundown of some of the pros and cons.
The pros of rentvesting
- You could get on the property market sooner and start building up equity
- You get to live in your preferred location
- You might be able to claim certain expenses come tax time, such as interest on your loan
- You might benefit from capital appreciation
The cons of rentvesting
- You won’t be able to access the First Home Owners Grant, since you’re technically an investor
- You’ll have to budget for both mortgage costs and rent
- You’ll have less security in the home you’re renting
- You won’t be eligible for the main residence exemption on Capital Gains Tax (at least not fully) if you decide to sell your property
Is rentvesting right for you?
Buying an investment property might not be as emotional as buying your dream home, but that doesn’t mean you should treat the process any less seriously.
In fact, you might have even more to mull over than someone who’s looking for a home to live in. Investors tend to be quite picky when looking for properties, and things like rental yield, suburb vacancy rates, and potential for long-term growth usually have more sway than, say, a stylish kitchen or room for a growing family.
Even after you’ve bought your investment property, there’s the matter of managing it. Will you hire someone to do it for you? Or will you take on the work of finding tenants, carrying out inspections, and handling repair requests yourself?
At the same time, you’ll have to keep up with your own rent and all the other responsibilities of being a tenant. And the usual uncertainty, like not knowing if your lease will be renewed or your rent will be increased, will continue to loom in the background.
Of course, if that’s no issue for you then rentvesting can be a worthwhile and rewarding path to go down. Whether you’re wedded to the inner city because of work or the lifestyle, it offers a chance to hop on the property ladder without giving up the perks and lively atmosphere you’re used to.