Rentvesting: How to Own Property While Still Renting

Rentvesting is a strategy where you buy an investment property in an affordable market — often regional, interstate, or outer suburban — while continuing to rent where you actually want to live.

In Sydney's expensive market, it's increasingly the only way for many people to get a foot on the property ladder without drastically compromising their lifestyle.

Why Rentvesting Makes Sense in Expensive Cities

A 2-bedroom apartment in Sydney's inner suburbs might cost $1.2 million with rent of $700/week. If you bought it with a 20% deposit, your mortgage repayments would be around $6,000/month — significantly more than the rent.

But a $500,000 townhouse in Brisbane's middle ring, renting at $550/week, might cost $2,500/month in mortgage repayments while you continue renting in Sydney for $2,500/month. You're no worse off for housing costs — and you're building equity in a growing market.

The Rentvesting Mindset

Rentvesting works when you shift your thinking from "buying the house I want to live in" to "buying the best investment I can afford." This means:

• Prioritising rental yield and capital growth potential, not personal preference
• Looking at interstate or regional markets, not just where you live
• Accepting that your investment property is a financial asset, not a lifestyle choice

Tax Advantages of Rentvesting

When you own an investment property (not your home), you can claim:

• Interest on the mortgage (fully deductible)
• Property management fees, insurance, rates
• Depreciation on the building and fixtures
• Repairs and maintenance

Meanwhile, the rent you pay to live somewhere has no tax impact at all.

The Main Risks of Rentvesting

1. No Capital Gains Tax Exemption

Your principal place of residence is CGT-exempt. An investment property is not. When you sell, you'll pay CGT on the profit. This is a real cost to model before committing.

2. Rent Increases

As a renter, you're exposed to rent increases and eviction (in most states). The security of home ownership doesn't apply to you.

3. Market Risk

If you buy in a market that doesn't perform — or if the investment property falls in value — you've taken on debt without the benefit of capital growth.

How Lenders Assess Rentvestors

When you're rentvesting, your own rent payments are counted as a liability by lenders — just like any other expense. This reduces your assessable serviceability.

Some lenders assess rentvesting more conservatively than owner-occupied borrowing because you don't have the "rent-free" home that reduces living expenses. Make sure your broker models the correct assessment for your situation.

Is Rentvesting Right for You?

Rentvesting suits people who:

• Live in an expensive city and can't afford to buy where they live
• Have flexibility in where they live (renting)
• Are focused on wealth-building through investment returns
• Can manage the additional complexity (tax, investment management)

It's less suitable for people who value the security and stability of owning their own home, or who are in a life stage where moving is difficult (established schools, aging parents, etc.).