Rentvesting in Australia: How to Live Where You Love and Invest Where It Makes Sense

Wesley Steer
3 days ago
2 min read

What is rentvesting?

Rentvesting means renting where you want to live (close to work, lifestyle, friends) while buying an investment property in a more affordable, better-yielding or higher-growth area. You separate lifestyle choice from investment choice—useful if your dream suburb’s purchase price is out of reach (for now).

Why young Aussies consider it

Lifestyle now, ownership sooner: Keep the café/work/gym life you value while still getting a foot on the ladder.
Flexibility: If your job or relationship status changes, you aren’t stuck selling the home you live in.
Tax treatment: Investment property expenses and depreciation may be deductible (speak to a tax pro).
Diversification option: Some pair rentvesting with shares/ETFs for balance.

The trade-offs

No main-residence CGT exemption on the investment (capital gains may be taxable on sale).
Landlord responsibilities: Tenants, vacancies, maintenance, insurance.
Cash-flow gaps: Interest rate moves and repairs can bite if your buffer is thin.
Emotional factor: You don’t “own” the place you live in—some people find that frustrating.

Crunching the numbers (framework)

Budget & buffers: Before anything, lock in 3–6 months’ expenses plus a property maintenance buffer (e.g., 1–2% of property value per year).
Yield vs growth:
- Higher yield can help cash flow.
- Higher growth compounds wealth but may cost you out-of-pocket each month.
- Many young investors target a balanced market with decent rental demand and tight vacancy rates.
All-in costs: Stamp duty, buyer’s agent (if any), inspection reports, landlord insurance, property management, strata/body corp, rates, maintenance—and a realistic interest rate assumption (plus a stress-test at +1–2%).
Tax lens: Work with an accountant so deductions and record-keeping are tidy from day one.
Exit strategy: What if you move overseas, want to buy your own home later, or rates jump? Have rules for when you sell, hold, or refinance.

When rentvesting beats “buy where you live”

Your target suburb’s purchase price would delay you 5–7+ years and crowd out investing.
You value proximity and flexibility today more than owning that specific postcode immediately.
You’ve found a fundamentally strong rental market with solid employment drivers and low vacancy.

When it probably doesn’t

You’re uncomfortable with landlord obligations or potential negative cash flow.
You’d lose key first-home buyer benefits you actually need to make the numbers work on an owner-occupier purchase.
You have high-interest debts or no emergency fund—fix those first.

A practical starter plan

Map lifestyle rent vs. invest budget (rent you’re happy to pay + target property price range).
Shortlist 2–3 regions with evidence: vacancy, median rent, time on market, long-term growth.
Run cash-flow with conservative assumptions (include rate rises).
Line up pre-approval, property manager quotes, and landlord insurance before making an offer.
Review annually: equity, rent changes, deductions, and whether buying your own home now stacks up.