Key Takeaways
- Rentvesting lets you live where you want while owning property where you can afford
- Tax deductions available because property is investment, not your home
- You typically forfeit first home buyer grants and stamp duty concessions
- Suits people priced out of their preferred area but wanting to build wealth
- Requires comfort being both tenant and landlord simultaneously
- Consider negative gearing benefits and depreciation deductions
Property prices in desirable areas often exceed what first-time buyers can afford. Rentvesting offers an alternative path - you can continue renting where you want to live while purchasing an investment property in a more affordable location.
At Mortgage and Finance Advisory, we help clients evaluate whether rentvesting suits their situation and structure finance for investment property purchases.
How Rentvesting Works
Instead of buying a home to live in, you buy an investment property elsewhere and rent it out. You continue renting your own accommodation, often in a more desirable or convenient location than you could afford to buy. The rental income from your investment helps cover the mortgage, and you may benefit from tax deductions and capital growth.
Benefits of Rentvesting
Enter the Market Sooner
If your preferred area is unaffordable, rentvesting lets you enter the property market now rather than waiting years to save a larger deposit.
Tax Advantages
Investment properties offer tax deductions including mortgage interest, property management fees, repairs and maintenance, depreciation on the building and fixtures, insurance and council rates. These deductions can significantly reduce your taxable income.
Lifestyle Flexibility
You can live close to work, family, or lifestyle amenities without being locked into a 30-year mortgage in that location.
First Home Buyer Benefits
By purchasing an investment property first, you typically forfeit first home buyer grants and stamp duty concessions. These can be worth $10,000-$30,000+ depending on your state. Consider this trade-off carefully.
Is Rentvesting Right for You?
Rentvesting suits people who are priced out of their preferred area to buy, want to enter the property market sooner rather than later, are comfortable managing tenants (or paying a property manager), understand they will forfeit FHB benefits, and can handle the emotional aspect of not owning where they live.
Consider: Some rentvesters eventually move into their investment property (after 6+ years, the CGT main residence exemption can apply). Others sell and use equity toward their dream home. We can help you plan the long-term strategy.
Frequently Asked Questions
Rentvesting means renting where you want to live while owning an investment property elsewhere. You get lifestyle flexibility while building wealth through property ownership.
Yes. Because your property is an investment (not your home), you can claim tax deductions for interest, repairs, depreciation, and other costs. This is a key financial benefit of rentvesting.
Generally yes. First home buyer grants and stamp duty concessions typically require you to live in the property. By buying an investment first, you forfeit these benefits.
It depends on your circumstances. Rentvesting suits people who want to live somewhere they cannot afford to buy, want to enter the property market sooner, and are comfortable being both a tenant and landlord.
Key risks include being at the mercy of your landlord, missing out on FHB benefits, complexity of managing tenants while renting yourself, and emotional aspects of not owning where you live.
Considering Rentvesting?
Get expert advice on whether this strategy suits your situation.
