Is rentvesting the right strategy for you?
By Lena Delgado · Updated 2026-07-22
Rentvesting means buying an investment property in one location while continuing to rent where you actually want to live. It’s grown popular as a way around the gap between where people can afford to buy and where they want to be day to day, but it comes with financial trade-offs that are worth understanding properly before you commit to a loan structured around it.
Why people choose it
The appeal is straightforward: renting lets you live somewhere that might be out of reach to buy, while still getting into the property market somewhere more affordable or with stronger growth prospects. It can also suit people who value flexibility, since renting makes it easier to relocate for work or personal reasons than owning and selling would.
It also lets you separate two decisions that are usually bundled together: where you want to live, and where the best property investment happens to be. For someone whose ideal suburb is well outside their budget, but who has family, a school catchment, or a job tying them there, rentvesting can be a way to start building equity somewhere else without waiting years to afford the area they actually want to live in.
The financial trade-offs to work through
Rentvesting isn’t free money. A few things to weigh honestly before committing:
- You’re paying rent and a mortgage at the same time, which is a real ongoing cost, not just a paper exercise.
- If the rental income from your investment property doesn’t cover the loan repayments, and it often doesn’t fully, you’re funding the shortfall from your own income.
- You give up access to most first home buyer schemes and stamp duty concessions, since these generally require the property to be your primary residence.
- Your borrowing capacity for an investment loan is assessed a bit differently to an owner-occupier loan, with lenders applying their own view of expected rental income and vacancy risk.
The loan structure itself, interest-only versus principal and interest, also affects that cash flow gap; our guide on interest-only vs principal and interest for investment loans walks through that trade-off in more depth.
Rentvesting vs buying where you live
| Rentvesting | Buying to live in | |
|---|---|---|
| Where you live | Wherever suits you, unconstrained by what you can afford to buy | Wherever you can afford to buy |
| First home buyer schemes | Generally not available | Often available if eligible |
| Ongoing cash flow | Rent plus mortgage shortfall, if any | Just the mortgage (and maintenance) |
| Flexibility to relocate | High, since you’re renting | Lower, since selling takes time and cost |
| Tax treatment | Investment property rules apply (get specific advice) | Different rules apply to your main residence |
Working out if it suits you
Rentvesting tends to make the most sense for people with stable income who can comfortably absorb the gap between rent and mortgage shortfall, and who are choosing flexibility deliberately rather than as a fallback. It makes less sense if the ongoing cash flow gap would stretch your budget thin, since an investment property with a struggling tenant or a maintenance bill can turn into real financial stress quickly.
It’s worth running the numbers on a genuinely conservative scenario before committing: a vacancy period between tenants, a maintenance bill you didn’t budget for, or a rate rise on the loan. If the strategy still holds up comfortably under that scenario, not just the optimistic one, that’s a good sign it’s financially sound for you rather than only appealing on paper.
It also helps to set a rough time horizon in your own mind, even if it’s flexible. Some people rentvest for a couple of years while they save further, others plan to hold the investment long term and never buy where they live. Being clear on which camp you’re in changes how you’d assess the property itself, since a short-term hold weighs liquidity and resale differently than a long-term one focused on rental yield and growth.
This is a strategy with genuine tax and lending complexity attached, so it’s worth getting specific advice for your situation rather than working from general rules of thumb; nothing here is personal financial or tax advice. A broker who works with investment property buyers regularly can model how a rentvesting purchase would actually affect your borrowing capacity and cash flow. Our methodology explains how we assess brokers on investment lending specifically, and our home page is a good place to start comparing.
FAQ
- Do I need a bigger deposit to rentvest than to buy where I live?
- Not necessarily, but lenders often assess investment loans slightly differently, factoring in rental income and applying their own buffers. Your borrowing capacity for an investment property can differ from what you'd get for an owner-occupied purchase on the same income.
- Can I still access first home buyer schemes if I rentvest?
- Generally no. Most first home buyer schemes and concessions require the property to be your primary residence, so buying an investment property first usually rules them out for that purchase, and sometimes for future ones too.
- What happens if my rental income doesn't cover the mortgage?
- This is common and expected in many rentvesting scenarios, especially early on. You're covering the shortfall from your own income while renting elsewhere, so it's important to budget for that gap rather than assume the property pays for itself.
- Is rentvesting only for people who can't afford to buy where they want to live?
- That's one common reason, but not the only one. Some people choose it deliberately, buying an investment property in a strong-growth area while renting somewhere they want to live for lifestyle reasons, like proximity to work or family.