Are you torn between wanting to own a home and staying in the suburb you love? You're not alone. With property prices soaring in major Aussie cities, breaking into the market without giving up your lifestyle can be tough. The good news? Rentvesting could be your ideal middle ground.
But what is rentvesting?
Rentvesting means buying a property in a more affordable (but high-potential) suburb while renting in the area you want to live in. This approach can help you:
Build equity sooner: Jump into the market now instead of waiting until you can afford that pricey postcode.
Maintain your lifestyle: Stay close to friends, family, or the amenities you can't do without.
Expand your options: Explore up-and-coming suburbs offering serious growth potential.
By purchasing in a more affordable area and renting in your dream spot, you're not leaving your property goals to chance or steep price hikes.
To start your rentvesting journey, you can use Aussie's Property Experience. It's a go-to resource where you are able to:
Pinpoint high-growth suburbs.
Make data-backed decisions instead of guesswork.
Ready to maintain your current lifestyle while still stepping onto the property ladder? Let this guide help you make both happen without missing a beat.
How does rentvesting work?
Rentvesting is all about mixing flexibility and forward-thinking. Here's how it comes together:
1. Check your finances.
Know your numbers: Determine how much you can spend on a deposit and mortgage repayments.
Budget beyond the mortgage: Don't forget rates, insurance, and general maintenance.
Talk to an Aussie Broker: We'll help you compare lenders, explore low-deposit loans, and see if you qualify for government incentives.
2. Define your goals.
Clarify your timeline: Are you aiming for a quick equity boost or a longer-term hold?
Lifestyle matters: If living near your favourite café, family, or workplace is non-negotiable, keep that in mind.
3. Research potential suburbs.
Research suburb rental yields and infrastructure plans: Dive into rental yields, infrastructure plans, and local growth indicators.
Look for up-and-coming hot spots: New transport links, shopping precincts, or steady job growth can drive property values.
Aim for the sweet spot: You want an affordable entry price paired with strong rental demand.
4. Choose the right property.
Tenant appeal: Properties near schools, shops, or reliable transport often fetch better rent.
Inspect thoroughly: Factor in potential repairs or renovations you'll need to fund.
Crunch the numbers: Confirm the likely rental income before signing the dotted line.
5. Set up your finances.
Chat with an Aussie Broker: Decide whether interest-only or principal-and-interest payments suit your goals.
Plan for surprises: Budget for rate changes, maintenance, and possible vacancies.
Consider refinancing: As your property gains value (and equity), you could refinance to fund renovations or expand your portfolio.
6. Rent where you love, invest where it counts.
Stay in your dream suburb: Keep renting in your favourite location close to beaches, cafés, or city vibes.
Leverage rental income: Use your tenant's rent to offset the mortgage on your investment property.
Review regularly: If circumstances change, you can sell, refinance, or switch tactics.
7. Think about the future.
Scale up or sell: Once you've built equity, you might trade up to a bigger home or buy another investment.
Stay flexible: Rentvesting doesn't tie you down; it gives you options if life takes a turn.
Seek expert advice: Financial planners, tax pros, and property managers can help you navigate the road ahead.
Plenty of rentvestors use their property's growth to upgrade later, whether that's nabbing their forever home in a top suburb or growing a multi-property portfolio.
You might also be interested in: The suburbs that are cheaper to buy than rent
What are the pros and cons of rentvesting?
Rentvesting can be an excellent way to enter the property market without sacrificing the lifestyle you love. Still, like any strategy, it's not all smooth sailing. Here's a quick look at the main pros and cons:
Pros | Cons |
|---|---|
Get on the property ladder sooner Buy in a lower-priced suburb Potentially smaller deposit Possible government schemes | Market fluctuations Suburb growth might be slower or lower than expected Wider economic changes can affect prices |
Live where you want Keep renting in your preferred area Maintain access to city amenities, family, or a relaxed coastal vibe | Managing cash flow Budget for maintenance, insurance, and potential vacancies Rate changes can increase repayments |
Build wealth through capital growth Target high-potential suburbs Use local insights to find undervalued areas Capital gains can fund your next move | Ongoing property management Requires effort or a property manager to handle tenants and upkeep Management fees add to overall costs |
Tax benefits & rental income Some expenses may be tax-deductible Rental income can help offset your mortgage | |
Flexibility to upgrade later Option to sell or refinance for a bigger place Potential to build a broader portfolio |
How do I choose the right suburb for rentvesting?
Picking the right suburb is crucial. You want strong capital growth, steady rental demand, and a price you can handle. Here's how to narrow it down:
Focus on key growth indicators.
Transport and amenities: Future train lines, new shopping centres, or major employment hubs can raise property values.
Undervalued but on the rise: Look for areas that are still reasonably priced but show growing rental demand or sales activity.
Compare rental yields and affordability.
High yields matter: The stronger your rental return, the more of your mortgage you can cover.
Demand and supply: A low vacancy rate and stable population growth often mean reliable tenancies.
Crunch the numbers: Do a bit of budgeting upfront to avoid nasty surprises.
Use Aussie's Property Experience to identify growth areas.
Spot rising stars: Zero in on suburbs with a promising rental yield and infrastructure outlook.
Compare yields and prices: Aim for the right balance between an affordable buy-in and decent rent.
How can I finance a rentvesting strategy?
Financing rentvesting isn't that different from a regular home purchase. It's about finding a loan structure that suits your goals and risk appetite:
Low-deposit investment loan options
Chat with a broker: A qualified mortgage broker (like one at Aussie) can compare lenders, products, and interest rates to find a low-deposit loan that fits your situation.
Consider a guarantor: If you're short on deposit, a family member might help. Just ensure everyone is clear on how it works.
Interest-only vs. principal-and-interest loans
Interest-only flexibility: Some investors choose interest-only repayments at first to free up cash flow for other needs.
Equity-building: Switching to principal-and-interest later helps you repay the loan and build equity faster.
Using equity for future investments
Leverage growth: As your property's value increases, you can use that equity to renovate, buy another property, or invest elsewhere.
Refinance wisely: A timely refinance can help you secure funds for your next move. Review your home loan regularly to ensure it meets your needs.
Key insights for rentvestors: lender views, borrowing power, and helpful loan features
Here are a few handy pointers to remember if you’re eyeing rentvesting:
How lenders view rentvestors
Different criteria: Investment loans may come with higher interest rates or stricter steps to approval.
Deposit requirements: You might need more upfront, but certain loan products and government programs can still help you buy with less.
Serviceability checks: Lenders often examine your existing debts and any other assets to ensure you can comfortably manage new repayments.
How rental income affects borrowing power
Boosting your capacity: Lenders typically factor in part of your rental income, which can help you qualify for a bigger loan.
Conservative estimates: Lenders often discount rental income slightly to account for vacancies or market changes, so you're not overstretched.
Loan features useful for rentvesting
Offset accounts: Linking your savings to your mortgage can reduce interest costs, freeing up your budget.
Redraw facilities: If unexpected expenses pop up, you can access any extra repayments you've made.
Flexibility: Split loans or switching from interest-only to principal-and-interest can help you adapt your strategy as your finances or goals evolve.
Rentvesting FAQs you should know about
Can I rent and own property in Australia at the same time?
Absolutely. That's the essence of rentvesting: buying an investment property in one suburb while renting where you truly want to live.
Is rentvesting better than buying a home to live in?
It depends on your goals. If you're keen to stay in a pricier spot but can't afford it yet, rentvesting lets you invest in a cheaper area while continuing to rent in your dream suburb. If you'd rather put down roots and own the place you call home, the owner-occupier route might be a better fit.
How much deposit do I need for rentvesting?
It varies. Some lenders prefer a bigger deposit for investment properties, but there are loan options and government schemes that can help you get in with less. Aim for 10–20% as a rough guide, or chat with an Aussie Broker for personalised advice.
What if rentvesting doesn't work out?
Rentvesting isn't set in stone. If your circumstances change or the market moves differently than expected, you can sell, refinance, or tweak your strategy. Keep on top of your finances, track rental demand, and chat with experts when unsure.
Is rentvesting right for you?
Rentvesting isn't for everyone but can be the ticket to owning a property without giving up your lifestyle. It's especially handy if:
You're a first-home buyer who can't afford your dream suburb yet.
You're an investor looking to build a portfolio without letting go of city living.
You're patient and happy to let your property appreciate over time.
Let Aussie help with your rentvesting goals
Rentvesting gives you the right balance between two worlds: living where you love while investing in property for the future. Here's a quick recap:
Flexibility and freedom: Rent in your ideal suburb and buy where it's more affordable.
Wealth-building advantage: Get on the ladder sooner, build equity, and capitalise on potential growth.
Support from Aussie: With Aussie's Property Experience, you can compare suburbs, check rental yields, and pinpoint high-potential areas.
If you're keen to explore rentvesting or want some friendly advice, book a free^ appointment with an Aussie Broker. We'll help you map your options and find a path that suits your goals.