Guide
Rentvesting in Australia: how it works, the pros and cons, and the numbers
Rent where you want to live, and buy an investment property where the numbers work. What rentvesting is, what it costs, the trade-offs, and who it suits.
By Mossy Taheri, licensed buyer’s agent · Updated
The short answer
Rentvesting means renting the home you live in and buying an investment property somewhere more affordable. You keep the lifestyle and location you want, while the investment builds equity. It usually needs less cash to start than buying a home in an expensive city, but you keep paying rent, you’re a landlord, and most first home buyer grants and stamp duty concessions no longer apply once you own property.
What is rentvesting?
Rentvesting (sometimes written rent-vesting) combines renting and investing. Instead of stretching to buy a home in the suburb where you live, you rent there and buy an investment property in a location chosen for its growth prospects and rental demand. The tenant’s rent and the tax deductions help cover the cost of holding the investment, and any growth in its value builds equity you can use later, including towards a home of your own.
It’s most common in Sydney and Melbourne, where the gap between what people can borrow and what homes in their preferred suburbs cost is widest. Many rentvestors buy in another city or state altogether.
How rentvesting works, step by step
- Check your borrowing power. Lenders count most of the expected rent as income, and your own rent as an expense. A mortgage broker can tell you what you can borrow for an investment loan.
- Work out your deposit. Investment loans usually need 10% to 20% plus purchase costs. Below 20%, you’ll usually pay lenders mortgage insurance; see the LMI calculator.
- Set a strategy. Decide whether you need growth, yield or a balance, and how long you’ll hold.
- Choose the market, then the property. Pick the city and suburb on data such as supply, vacancy, rental demand and infrastructure, not on where you know.
- Buy and lease it out. A good property manager matters more when the property is in another city.
- Review it. As the property grows in value, the equity can fund your next purchase or your future home.
Rentvesting vs buying a home: the numbers
An illustration of the cash needed upfront, with a 20% deposit in both cases. It compares buying a $1,200,000 home in Sydney with buying a $650,000 investment property in Queensland while continuing to rent.
| Buy a $1,200,000 home (NSW) | Rentvest: $650,000 investment (QLD) | |
|---|---|---|
| Deposit (20%) | $240,000 | $130,000 |
| Stamp duty | $48,187 | $22,275 |
| Cash needed (before legal and other costs) | $288,187 | $152,275 |
| Loan | $960,000 | $520,000 |
| Rent you pay | None | You keep paying rent |
| Rental income | None | Tenant pays rent to you |
Stamp duty is at 2026-27 general rates; NSW first home buyers pay no duty up to $800,000 and reduced duty up to $1,000,000, so a $1,200,000 home gets no concession. Your own figures will differ: check duty in the stamp duty calculator, and compare renting and investing against buying over time in the rent vs buy calculator.
For a real example over several years, read our rentvesting vs homeownership case study.
The pros of rentvesting
- Get into the market sooner, with a smaller deposit than a home in an expensive city.
- Live where you want: near work, family and lifestyle, without paying that suburb's purchase price.
- Invest on the numbers: choose a market for growth and rental demand, anywhere in Australia.
- Rent and tax deductions help cover holding costs.
- Flexibility: renting makes it easier to move for work or family.
- Equity from the investment can fund the next purchase or your future home.
The cons and risks of rentvesting
- You lose first home buyer benefits. Most first home owner grants and stamp duty concessions require you to have never owned residential property in Australia, so buying an investment first generally rules them out. Check your state’s rules and the deposit schemes before you decide.
- Capital gains tax applies when you sell, because the property isn’t your main residence.
- You still pay rent, and your landlord can raise it or end the lease.
- You’re a landlord, with vacancies, repairs, insurance, land tax in some states and tenancy laws to manage.
- The investment has to be good. Rentvesting only works if the property grows in value. A poor purchase, or selling too early, can leave you worse off than renting and saving.
- Discipline matters. The money you’d have put into a home loan has to go into the investment, not into spending.
Rentvesting and tax
Rent from the investment is taxable income. Most costs of owning it are generally deductible: loan interest, property management, insurance, council and water rates, repairs and depreciation (see the depreciation calculator).
Negative gearing changes from 1 July 2027. If you buy an established property after 7:30pm AEST on 12 May 2026, its net rental losses can offset your salary only until 30 June 2027. After that they’re quarantined against future property income and gains. New builds keep negative gearing. That makes cash flow more important for new rentvestors: test a property in the property cash flow calculator, and read what the negative gearing reform means.
When you sell, capital gains tax applies. From 1 July 2027, the 50% discount is replaced by indexation and a 30% minimum tax for gains after that date. Estimate it in the capital gains tax calculator, and check your situation with an accountant.
Choosing where to buy as a rentvestor
Because you won’t live in it, the investment can be anywhere. That’s the main advantage of rentvesting, and the main risk if the market is chosen badly. Look at:
- Supply: how many new homes are approved and under construction compared with population growth.
- Rental demand: vacancy rates, days on market for rentals and rent growth.
- Growth drivers: jobs, infrastructure and a diverse local economy.
- The property itself: land content, scarcity and what tenants in that area want.
- The numbers: yield and cash flow at today's interest rates. Start with the rental yield calculator.
We screen markets nationally and buy where the numbers suit each client’s strategy, whether that’s Brisbane, Perth, Adelaide, Melbourne or a regional centre. Check the yield of any property in the rental yield calculator.
Who rentvesting suits, and who it doesn’t
It can suit you if
- You'd be priced out of, or overstretched in, the area you want to live in.
- You're happy to rent for the next several years.
- You have a deposit and steady income, and want your money working in property now.
- You can hold the investment for the long term.
It may not suit you if
- You want the security of owning your home soon.
- You're relying on a first home buyer grant, stamp duty concession or deposit scheme to buy.
- Your income is uncertain, or you couldn't cover a vacancy or a rise in interest rates.
Buying your first property as an investment? See how we help first home buyer investors and rentvestors, and what a buyer’s agent costs in our buyer’s agent fees guide.
Thinking about rentvesting?
Book a free discovery call. We'll talk through your budget and goals, whether rentvesting fits, and the markets where the numbers work. We work only with investors and buy across Australia.
Book a free discovery callRentvesting: common questions
What is rentvesting?
Rentvesting means renting the home you live in and buying an investment property somewhere else. You live where suits your work and lifestyle, and invest where prices, rental demand and growth prospects suit your budget and goals.
Is rentvesting a good idea?
It can be, if you'd otherwise be priced out of the area you want to live in, you're comfortable renting long term, and the investment property is chosen on its fundamentals. It suits people who want to get into the market sooner. It's less suited to people who want the security of owning their home soon, or who'd rely on first home buyer concessions they would lose.
Can I still get the first home owner grant if I rentvest?
Usually not. Most first home owner grants and stamp duty concessions require that you have never owned residential property in Australia, so buying an investment first generally rules you out. Check the rules in your state before you buy.
What are the tax benefits of rentvesting?
Rental income is taxable, and most costs of owning the investment, such as interest, property management, insurance, rates and depreciation, are generally deductible. From 1 July 2027, losses on established property bought after 12 May 2026 can no longer reduce tax on your salary, so cash flow matters more. When you sell, capital gains tax applies because it isn't your main residence.
Is rentvesting worth it?
It depends on the property you buy and how long you hold it. Rentvesting works when the investment grows in value and rent covers much of the cost. It doesn't work if you buy a poor property or sell early. Compare scenarios in our rent vs buy calculator and talk to your broker and accountant.
What is the difference between rentvesting and buying a home?
Buying a home gives you security and the main residence capital gains tax exemption, but in expensive cities it can take a large deposit and stretch your borrowing. Rentvesting usually needs less cash to start and lets you invest where the numbers work, but you keep paying rent, take on landlord responsibilities, and pay capital gains tax when you sell.
General information only. It doesn’t consider your personal circumstances and isn’t financial, tax, credit or legal advice. Speak to a licensed professional before you act.