With house prices at record highs in many parts of the country, many prospective home buyers are facing a real challenge, particularly younger Australians on the wrong side of the increasing generational wealth gap. Renting and investing – or ‘rentvesting’ – is an increasingly popular option buyers are exploring. 

Rentvesting might seem counter intuitive –  renting and paying off a mortgage at the same time. But depending on your lifestyle, life stage and income, for some, it may make sense to rent out an investment property in a more affordable town or suburb while continuing to live in the area of choice.    


How does rentvesting work?

  1. Buy an investment property in an area affordable to your budget. 
  2. Rent it out to deliver stable long-term returns from rental income and contribute that income to your mortgage. 
  3. Continue to live in a rented property closer to your lifestyle, family and work needs – whether it’s a great beach, a great school or a great workplace. 

The case for rentvesting...

The potential upside to rentvesting is you get to own a property that could increase in value while receiving a regular rental income and continuing to live in the suburb of your choice.  

Some things to consider: 

  • You could potentially benefit from an uplift in property prices in the area where you buy, and then a capital gain when you sell.

  • You may be able to deduct some expenses at tax time on the property you buy, such as interest payments, maintenance costs and property management fees.

  • Meanwhile, you may not have to worry about paying for repairs on the rented property in which you are living – the landlord should take care of it.

...and the case against

But like anything, rentvesting isn’t without a potential downside. 

  • You may have to pay capital gains tax if you decide to sell your investment property.

  • You won’t benefit from any uplift in property prices in the area you live, if you don’t own there.

  • You’re the landlord, so you’re on the hook for keeping the investment property maintained and paying other costs – council rates, body corporate or property management fees – although you may be able to claim these as a tax deduction.

  • Rental income may not always cover mortgage repayments so you may need to factor this into your budget.

  • Rental properties are subject to periods of vacancy, which may require you to cover mortgage payments and expenses out of pocket until you find new tenants.

  •  Property values can fluctuate for a variety of reasons including changes in local market conditions, economic factors, and housing trends. A downturn in the real estate market could potentially lower property values and impact investment returns.

Always speak to a financial adviser or seek legal advice before making any financial decisions.  

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Information on this page is subject to change without notice. 

We are not providing financial product advice. This article has been prepared without taking into account any personal objectives, financial situations or needs. You should consider obtaining independent advice before making any financial decisions.