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When you can't afford to buy the home you want, the rentvesting strategy is a good alternative. You keep renting and buy an affordable investment instead.

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Owning a home was once a cornerstone of the Great Australian Dream. However, thanks to skyrocketing property prices in many parts of the country the dream is starting to take a different shape for some buyers: rentvesting.

Instead of buying the property they want, rentvesters keep renting in an area they like living in. Then they buy a more affordable investment property somewhere else. They may never live there but they own a property and they're paying it off. For some Australians, it's their best shot at entering the market.

What is rentvesting?

Rentvesting is an investment strategy for would-be home owners who can't afford their dream home yet.

Let's say you want to buy a four-bedroom home in Sydney’s inner west, but the sale prices in the area mean these homes are out of your reach. By following the rentvesting strategy you'd simply rent the kind of property you want to live in.

Instead of buying this expensive dream home, you purchase a more modest property in a suburb where prices are more affordable. The property you buy can then be rented out to help cover your own rental payments and later sold for a capital gain. This strategy lets you have the lifestyle you want now, while at the same time building a property portfolio for the future.

As another example, let’s assume that buying your dream home leads to mortgage repayments of $4,000 a month. But if you rent a home in the same area, rental payments could be $2,200 a month, leaving you with $1,800 per month to invest.

Watch: How rentvesting works

Pros and cons of rentvesting


  • Enter the property market sooner. Rentvesting allows you to break into the property market sooner with a smaller deposit, as opposed to waiting several years until you are able to afford your dream home.
  • Live the lifestyle you want. If rental prices allow, you can live in your dream home now and not have to compromise on location or features, and you don’t have to worry about taking on the long-term commitment of a big mortgage.
  • Build wealth. Rentvesting allows you to start building your investment property portfolio, which can be used to generate wealth for you and your family in the future.
  • Save for your dream home. Owning an investment property allows you to save to buy your dream home.
  • Flexibility. When you’re renting, you can easily upgrade or downgrade to a different home if your circumstances change, for example if you lose your job or get a high-paying promotion, with no stamp duty expenses or legal costs to worry about.
  • Move around. If you’re not ready to put down permanent roots in a particular area, rentvesting gives you the freedom to move around and even travel the world if you wish.
  • Tax benefits. You can claim interest payments on your investment property loan as a tax deduction.
  • Choose where to invest. Where you want to live and the best place to buy an investment property often won’t be the same, so rentvesting allows you to be ruthless when it comes to choosing an investment.


  • Buying an investment first. Buying an investment property before purchasing your own home can seem counter-intuitive to many people. Investment loans tend to have higher interest rates too.
  • You lose first home buyer benefits. Australian governments have some support policies for first home buyers. This includes grants and stamp duty discounts. Investors don't get these benefits, and if your first home is an investment you won't qualify for first home buyer support later when you do buy your dream home.
  • Dead money. The old adage that "rent money is dead money" may be a deterrent for some people considering this approach.
  • You don’t own your home. As much as you may love your rental property, you don’t own it. This can be especially difficult if you form an emotional connection to a house but then the landlord wants you to move out.
  • You can’t make it your own. Although a rental property might be vastly improved by a renovation project or simply a fresh coat of paint, remember that it’s not yours to tinker with.

Buy or rent: Which is cheaper?

On paper, renting often works out cheaper in the long run than buying. This is because home owners pay a lot of money in interest compared to rent. A quick example calculation of renting versus buying costs found that renters end up hundreds of thousands of dollars better off over the 30 years it would take to pay off a mortgage. Not to mention maintenance and other costs of owning property.

But this doesn't factor in future equity growth, which is something only home owners (and investors) can take advantage of.

Is rentvesting the best of both worlds?

Rentvestors get the best of both worlds in some respects. This is because they get to build equity in a property while avoiding the heavy cost of a mortgage on their dream home. Their maintenance costs on their investment, and their mortgage interest, are all tax deductible too.

But rentvestors also end up renting and paying off a mortgage. They have to deal with all the problems renters face, such as unresponsive landlords and the possibility of having to move every few years. This can be frustrating for many people.

How to decide on the right approach for you

Before you choose to buy a home or rentvest, make sure you can afford to rent and have a mortgage. Just because an investment property is cheaper than your dream home doesn’t necessarily mean that you can afford it, and just because renting feels like throwing away money doesn’t automatically mean you should mortgage yourself to the hilt.

Use a mortgage repayment calculator and break down your costs. Before deciding on either approach, you could also benefit greatly by seeking out expert advice from a mortgage broker.

Compare investment loan rates

1 - 6 of 6
Name Product Interest Rate (p.a.) Comp. Rate p.a. Fees Monthly Payment

Unloan Variable Home Loan P&IInvestment≥ 20% Deposit Refinancers only

Unloan Variable Home Loan
  • App: $0
  • Ongoing: $0 p.a.
Investors can get a low variable rate. Apply online and get fast approval. Backed by the Commonwealth Bank.

homeloans.com.au Low Rate Home Loan with Offset IOInvestment≥ 40% Deposit

homeloans.com.au Low Rate Home Loan with Offset
  • App: $0
  • Ongoing: $0 p.a.
This competitive variable rate loan is for investors who want interest-only repayments. You will need a 40% deposit.

HSBC Home Value Loan P&IInvestment≥ 30% Deposit

HSBC Home Value Loan
  • App: $0
  • Ongoing: $0 p.a.
$3,288 refinance cashback offer
This variable rate loan is available for property investors with 30% deposits. This loan has very few fees. Eligible refinancers borrowing $250,000 or more can get a $3,288 cashback. Terms and conditions apply.

homeloans.com.au Low Rate Home Loan with Offset P&IInvestment≥ 20% Deposit

homeloans.com.au Low Rate Home Loan with Offset
  • App: $0
  • Ongoing: $0 p.a.
This investment loan keeps fees low, has a sharp interest rate and comes with a 100% offset account. This loan is not available for construction.

Newcastle Permanent Building Society Real Deal Home Loan P&IInvestment≥ 20% Deposit

Newcastle Permanent Building Society Real Deal Home Loan
  • App: $595
  • Ongoing: $0 p.a.
A competitive variable rate investor loan. 20% deposit required. Get up to $3,000 refinance cashback when your LVR is 90% or lower ($2,000 cashback for loan amounts of $250K+ and above, $3,000 for $500K+). Other conditions apply.

homeloans.com.au Low Rate Home Loan with Offset IOInvestment≥ 20% Deposit

homeloans.com.au Low Rate Home Loan with Offset
  • App: $0
  • Ongoing: $0 p.a.
A competitive rate with no application or ongoing fee. This loan is not available for construction.

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Credit services for Aussie Select, Aussie Activate and Aussie Elevate products are provided by AHL Investments Pty Ltd ACN 105 265 861 (“Aussie”) and its appointed credit representatives, Australian Credit Licence 246786. Credit for Aussie Select products is provided by Residential Mortgage Group Pty Ltd ACN 152 378 133, Australian Credit Licence 414133 (“RMG”). RMG is a wholly-owned subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL and Australian Credit Licence 234945. Credit for Aussie Activate products is provided by Pepper Finance Corporation Limited ACN 094 317 647 (“Pepper”). Pepper Group Limited ACN 094 317 665, Australian Credit Licence 286655 acts on behalf of Pepper. Credit services for Aussie Elevate products are provided by AHL Investments Pty Ltd ACN 105 265 861 Australian Credit Licence 246786 (“Aussie”) and its appointed credit representatives. Aussie is a trade mark of AHL Investments Pty Ltd ABN 27 105 265 861. Credit and any applicable offset accounts for Aussie Elevate are issued by Bendigo and Adelaide Bank Limited ABN 11 068 049 178 AFSL / Australian Credit Licence 237879.

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4 Responses

  1. Default Gravatar
    SofiaApril 11, 2022

    If you rentvest to start, and later move to your investment property (1 year later), what are the CGT implications when you decide to sell?

    • Avatarfinder Customer Care
      RichardApril 13, 2022Staff

      Hi Sofia,

      In cases where the rental property becomes the main residence, you may qualify for a CGT exemption if you live there for at least 12 months before selling.

      I hope this helps.


  2. Default Gravatar
    DsalApril 4, 2017

    If I buy a property, rent it out for a while whilst renting another property myself, then later move in to my property, what are the tax implications? Will I be subject to CGT for the investment period of the owned property? How is it calculated if I don’t sell until a number of years later? Anything else I should consider?

    • Avatarfinder Customer Care
      MayApril 4, 2017Staff

      Hi Dsal,

      Thank you for your question and for contacting finder.com.au – we are a financial comparison website and general information service, we are not mortgage specialists so can only offer general advice.

      Basically, in your case, the CGT you’ll pay will be worked out by comparing the number of days you lived in the property to the number of days you rented the property. You’ll also be partially exempt from capital gains tax. You can find more details about CGT on our guide to selling properties and capital gains tax.


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