Rentvesting Guide (Australia): rent where you want, buy where the numbers work
Rentvesting is one of the simplest ways to get into property without giving up the lifestyle, school zone, commute or suburb you love. You keep renting in the area you want to live, and you buy an investment property in a market that stacks up financially.
Next step: If you want to compare your numbers in 60 seconds, use our Rentvesting Calculator (cash flow, buffers, and a simple buy-vs-rent view).
Australia-wide mortgage broking support by phone, video and email. This guide is general information only —
always confirm tax and legal details with qualified professionals.
First home buyer? This page covers general rentvesting only — for scheme eligibility, deposit strategy and borrowing power trade-offs, see our
First Home Buyer Rentvesting add-on.
We keep scheme and eligibility detail off this page to avoid confusion — the FHB add-on covers it properly.
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What is rentvesting?
Rentvesting is a property strategy where you rent the home you live in and buy an investment property somewhere else. In plain English: you rent in the suburb (or city) that suits your life, and you invest in a suburb that suits your budget.
It’s popular with first home buyers and upgraders who feel stuck between two choices: (1) buy in a location they don’t really want just to “get on the ladder”, or (2) keep renting and hope prices come back to them. Rentvesting gives you a third option — start building equity now, while keeping flexibility.
Rentvesting in one sentence: live where you want, invest where the numbers work.
If you later plan to move into the investment property, speak with your accountant early — tax outcomes can change depending on how you use the property over time.
Common rentvesting profiles
- First home buyers priced out of their ideal area, but with stable income and savings.
- Young families who want to stay near work/schools now, and buy smart elsewhere.
- People relocating often (defence, healthcare, corporate transfers) who value flexibility.
- Upgraders who want to “keep the old place” as an investment when buying their next home.
When rentvesting may not be the best move
- Your budget has no room for a buffer (repairs, vacancy, rate rises).
- You expect to buy your dream home very soon and a new loan could reduce borrowing power.
- You dislike the admin of property management (or won’t outsource it).
- You’re relying on “perfect” growth assumptions to make the numbers work.
A good plan still works when life gets messy — vacancy, higher rates, or a new baby.
Why rentvesting is rising in Australia
Rentvesting keeps growing because it solves a real problem: many Australians want to live near jobs, family and lifestyle hubs, but the purchase price in those areas can be out of reach. Rentvesting lets you stay in the location you love while you invest in a market with a more achievable entry point.
It also matches how many people actually live today: flexible work, changing cities, and a desire to avoid overcommitting to one property too early. You can rent close to everything and still build a long-term asset.
Three reasons people choose rentvesting
- Affordability: buy in a market that fits your deposit and borrowing power.
- Flexibility: renting makes it easier to move for work, family or lifestyle.
- Time in the market: you can start building equity and a repayment history earlier.
What rentvesting is not
- It’s not a “hack” to get stamp duty concessions (those often apply to owner-occupied).
- It’s not guaranteed to outperform buying a home to live in.
- It’s not just about chasing the highest rental yield — quality and location still matter.
Interest rates and lending conditions change over time. The Reserve Bank of Australia explains how the cash rate influences mortgage rates in its Cash Rate Target Overview.
Rentvesting vs buying to live: a clear comparison
Most people get stuck because they compare rentvesting and buying emotionally (security vs freedom) rather than comparing them with the same “bank-ready” numbers. The comparison below is a simple way to keep it fair.
| Decision point | Rentvesting | Buying to live (PPOR) |
|---|---|---|
| Where you live | Rent in your preferred area | Live in the property you buy |
| Upfront costs | Deposit + investment purchase costs (often higher stamp duty than owner-occupied) | Deposit + owner-occupied costs (may access buyer support if eligible) |
| Cash flow | Rent + mortgage + holding costs, offset by rental income | Mortgage + ownership costs, no rental income |
| Flexibility | High (easy to move rentals) | Lower (moving can be costly and time-consuming) |
| Wealth building | Build equity in the investment property | Build equity in your home |
| Tax treatment | Investment property tax rules apply (seek tax advice) | Primary residence rules apply (seek tax advice) |
If you want a quick reality check, use our rentvesting calculator (also used as a rentvesting vs buying calculator) to compare the costs side-by-side.
Calculators are only as good as the inputs. If you want a bank-ready version of your numbers, a broker can help you model repayments, rental shading and buffers the way lenders do.
The rentvesting numbers that matter
A strong rentvesting plan is built on three numbers — not just “Can I get a loan?” The three numbers are: borrowing power, cash flow, and buffers.
1) Borrowing power (serviceability)
Lenders don’t assess your loan at today’s rate. They test whether you could afford repayments if rates rise and your living costs are higher. Rental income is also usually discounted (often called “rental shading”).
Start with a simple estimate, then validate it with your broker: max borrowing calculator.
- Income, overtime/bonuses and employment type
- Existing debts (credit cards, HECS/HELP, personal loans)
- Living expenses (lenders use benchmarks and your declared spending)
- Expected rent (usually not counted at 100%)
2) Cash flow (weekly reality)
Think in weekly numbers. Your investment might be “good on paper” but uncomfortable month-to-month if the cash flow is tight.
- Rent you pay as a tenant
- Loan repayments on the investment property
- Rates, insurance, strata (if any), maintenance, property management
- Rental income (allow for vacancy and conservative rent)
Useful tools: mortgage repayment calculator and property investment calculator.
3) Buffers (what keeps you safe)
Buffers stop a smart strategy becoming a stressful one. Most successful rentvesters plan buffers in three places:
- Cash buffer: aim for 3–6 months of property costs, kept in an offset if possible.
- Rate buffer: model repayments at a higher interest rate than today.
- Vacancy buffer: assume at least a few weeks per year without rent.
A broker can also structure buffers with offsets, splits and repayment choices that match your goals.
Quick rule: if the deal only works with perfect assumptions (no vacancy, no rate rises, no repairs), it’s not “bank-ready” yet.
Lending rules & policy cues you should know
Rentvesting is still a standard home loan process — but lenders assess investment loans differently from owner-occupied loans. Understanding the common policy “trip-wires” helps you avoid wasted applications and protect your credit score.
Assessment rates and buffers
Lenders apply an assessment rate (your actual interest rate plus a buffer) to check you could handle higher repayments. Regulators may also set macroprudential expectations that influence how banks lend.
APRA publishes updates on macroprudential settings and explains why serviceability buffers exist for housing lending. See APRA’s macroprudential settings update.
Deposit, LVR and LMI
Your loan-to-value ratio (LVR) affects your options. Higher LVR can mean tighter policy, higher rates, or lenders mortgage insurance (LMI). Sometimes paying LMI is a deliberate choice to enter the market sooner — but it needs to be modelled.
If you’re comparing options, read: LMI vs mortgage protection insurance.
Rental income is usually shaded
Banks rarely count 100% of the expected rent. They often apply a haircut to allow for vacancy and costs. This is one reason two lenders can give very different borrowing power results.
Tip: ask your property manager for a conservative rent appraisal and keep your budget realistic.
Property types and postcode rules
Some properties are harder to finance: very small apartments, high-density towers, unusual construction, or locations with limited sales data. Policy varies by lender.
If you’re unsure, send the listing before you offer — we can check lender policy fast.
Want a lender-ready plan? Start with our home loan guide and speak with a broker before you pay for reports or make offers.
How to choose the right investment property for rentvesting
The best rentvesting property is usually the one that balances livable tenant demand, manageable cash flow and long-term resale appeal. “Perfect yield” often comes with hidden risk. “Perfect growth” often comes with painful cash flow.
Start with the tenant, not the spreadsheet
- Easy-to-rent layouts (2–3 bed homes and well-located units are common sweet spots)
- Close to jobs, hospitals, universities, transport or major employers
- Low-maintenance features that reduce repair surprises
Yield vs growth: avoid extremes
Aiming for “high yield at any cost” can lead to inferior assets. Aiming for “growth at any cost” can crush your cash flow. Many rentvesters choose a middle ground: a property that can hold itself while still having strong fundamentals.
If you want a deeper conversation about investment lending strategy, see our property investment mortgage broker page.
Build your “boring” risk plan
- Landlord insurance from day one
- Independent building and pest inspections where relevant
- A property manager who screens tenants well and knows your local market
- An allowance for repairs (hot water, fencing, appliances)
If you plan to move into it later
Some rentvesters buy a “future home” they might live in later. That can work — but be careful: the loan is still assessed as investment lending initially, and tax outcomes may differ depending on when you move in.
Talk to your accountant early if a future move-in is part of the plan.
Tax basics for rentvesting (general information)
Rentvesting creates an investment property, so standard Australian investment property tax rules apply. The big themes are: rental income, deductible expenses, depreciation, and capital gains tax (CGT) when you sell.
Common deductible expenses (examples)
- Loan interest on the investment loan (subject to your circumstances)
- Property management fees and letting fees
- Council rates, water charges (where applicable), landlord insurance
- Repairs and maintenance (not improvements — your accountant will clarify)
The ATO explains how to claim rental expenses and what you can and can’t claim.
Negative gearing and cash flow are different things
People often confuse “tax-deductible loss” with “affordable”. A negatively geared property can still cost real cash each month. Always model the after-rent, after-costs holding cost and keep a buffer.
Depreciation schedules
Some properties may be eligible for depreciation deductions. A quantity surveyor typically prepares a depreciation schedule. Whether depreciation applies depends on the property and your circumstances.
Ask your accountant whether a schedule is worthwhile for the property you’re considering.
CGT and “moving in later”
If you buy as an investment and later live in the property, CGT and main residence rules can become more complex. Get tax advice before you buy if this is likely.
For consumer-friendly explanations of investment property risks, MoneySmart has a useful overview of buying an investment property.
Example rentvesting scenario (rent where you want, buy where the numbers work)
Here’s a realistic example of how rentvesting can work. Numbers are indicative only (rates and policies vary between lenders and change over time).
Want the full worked example? See our Ballarat rentvesting case study for suburb price/rent bands and scenario comparisons.
ntvesting case study for suburb price/rent bands and scenario comparisons.Craig & Amanda’s starting point
- Couple renting in an inner-city area close to work and family.
- Combined income: stable PAYG (plus occasional bonuses).
- Savings: $90,000 (mix of savings + gifts).
- Goal: buy their “forever home” in 3–5 years, but start building equity now.
They want flexibility now, but don’t want to sit on the sidelines.
The rentvesting plan
Craig and Amanda keep renting where they want to live. They buy a solid, easy-to-rent investment property in a market with strong tenant demand and an entry price they can afford.
- Purchase price (investment): $440,000
- Deposit target: 15% ($66,000) + costs (stamp duty, legals, inspections)
- They keep a separate emergency buffer in an offset account
They run the numbers with a conservative rent estimate and build in vacancy and maintenance.
How we make it lender-ready
- Use a realistic rental appraisal (not best-case rent)
- Show savings history and stable employment
- Minimise credit card limits and avoid new debts before applying
- Choose a lender whose rental shading and policy suits their scenario
This is where broker advice matters: different lenders can assess the same couple very differently.
What success looks like
The goal isn’t “own property at all costs”. Success for Craig and Amanda looks like:
- They keep the lifestyle they want today.
- The investment property is manageable to hold even if rates rise.
- They build equity and a repayment history that can help with a future home purchase.
- They keep options open: continue rentvesting, upgrade later, or keep investing.
Want help modelling your version of this plan? Use the calculator, then submit a request and we’ll sanity-check the assumptions.
Want to see a local example? Read our rentvesting Ballarat case study
Rentvesting step-by-step plan (bank-ready)
Here is the process we recommend for most rentvesters. It keeps you organised and reduces the chance of accidentally harming your borrowing power.
Step 1: Set the goal and time horizon
- Are you rentvesting for lifestyle, for a future home, or for long-term wealth?
- How long do you expect to keep renting (12 months vs 5+ years changes decisions)?
- What’s your comfort level for cash flow variability?
Step 2: Get a borrowing power range (before you shop)
Start with a calculator, then confirm with a broker so you don’t shop in the wrong price bracket.
Step 3: Build the “deposit + costs + buffer” stack
- Deposit amount (10%, 15% or 20% — depends on your plan)
- Purchase costs (stamp duty, legals, inspections, lender fees)
- Buffer funds (aim 3–6 months of property costs if possible)
If you’re a first home buyer exploring support schemes, start with First Home Buyer Rentvesting, then see our first home buyer guide and the first home buyer scheme calculator.
Step 4: Choose the property (with finance in mind)
- Check lender policy for the property type before you offer.
- Get a rental appraisal and confirm property management costs.
- Order building/pest where relevant and budget for immediate repairs.
Step 5: Structure the loan for flexibility
Loan structure matters for rentvesting. Offsets, splits, repayment type and future plans (e.g. buying a home later) should be considered before settlement.
Our investment mortgage broker team can help structure this around your goals.
Step 6: Set up the investment like a business
- Landlord insurance and a reliable property manager
- Separate account/offset for expenses and buffers
- Diary dates for lease renewal, rate reviews and annual insurance checks
Once you’ve held the property for a while, it’s worth reviewing your rate and structure. Start with our rate review calculator, then follow the refinance guide if switching lenders makes sense.
Tools & internal guides (recommended next clicks)
This is the internal link hub for your rentvesting research. If you follow these in order, you’ll cover borrowing power, cash flow, and next steps — without guesswork.
Core calculators
- Rentvesting calculator (rentvesting vs buying calculator)
- Mortgage repayment calculator
- Property investment calculator
- Max borrowing calculator
Guides for first home buyers and investors
- First home buyer guide
- Home loan guide (documents + approval steps)
- Property investment mortgage broker
- Contact Rate Challenge
Rentvesting cluster pages
These pages should link back to this guide as the “pillar” page so Google sees a clear topical cluster.
Ready to plan your rentvesting move?
If you want a broker to sanity-check your numbers and show you lender options, we can help Australia-wide.
We compare lenders, model serviceability, and help structure the loan for flexibility — at no cost to you (we’re paid by the lender if you proceed).
Rentvesting FAQs
Is rentvesting a good idea in Australia?
It can be — if the cash flow is manageable and it aligns with your lifestyle and timeline. The best way to decide is to compare rent vs buy using conservative assumptions and include buffers for vacancy and rate rises. If the plan still works, rentvesting can be a practical path into property.
First home buyer rentvesting: where should I start?
Start with this Rentvesting Guide for the overall strategy, then use our First Home Buyer Rentvesting page for the first home buyer-specific angles (schemes/eligibility, deposit planning and borrowing power checks).
What deposit do I need to rentvest?
Many lenders prefer 20% to avoid LMI, but some borrowers use smaller deposits with LMI to enter the market earlier. Your deposit choice affects cash flow, rates and options — so it should be modelled, not guessed.
How does rentvesting affect my future home loan?
The investment loan can reduce your borrowing power for a future home purchase, especially if cash flow is tight. On the flip side, equity growth and a good repayment history can help. Strategy and structure matter if your plan is to upgrade within a few years.
What are the biggest risks of rentvesting?
The main risks are cash flow pressure (rates/vacancy), buying a poor-quality asset, and overestimating rent or growth. Buffers, conservative inputs and a sensible property choice reduce these risks.
Should I use interest-only or principal-and-interest?
It depends on your strategy, risk tolerance, and lender policy. Interest-only can help cash flow, but repayments usually rise when the interest-only period ends. Get tailored advice before choosing.
Can I rentvest and still refinance later?
Yes. Many rentvesters review their loan after settlement or when rates change. Refinancing depends on your equity position, serviceability and lender policy at the time.
What’s the fastest way to check if rentvesting works for me?
Use the rentvesting calculator, then book a quick strategy call so we can confirm your borrowing power and stress-test the scenario using lender-style assumptions.
Can Rate Challenge help Australia-wide?
Yes. We work with clients across Australia via phone, video and email. If you’re local to Victoria we can also meet by appointment, but most rentvesting plans can be done fully remote.
General consumer resources: RBA cash rate overview, APRA macroprudential settings, ATO rental expenses guidance, and MoneySmart property investment information are good starting points for understanding the broader context.