Rentvesting: what is it and how can it help you enter the property market sooner?
The Australian housing market is notoriously hard to break into. So much so, the Coalition recently announced its plan to allow first home buyers to access up to $50,000 from their superannuation to get into the property market. There’s also Labor’s Help to Buy scheme, through which the government will contribute 30–40 per cent of the cost of a home, to be paid back when the property is sold.
While there are pros and cons to both proposed ideas, the fact remains that Australian property prices are continuing to rise, despite interest rate increases and tighter lending restrictions.
This means Australians trying to enter the property market need to get creative. But how?
One option – and something we recommend often at Reventon – is rentvesting

What is rentvesting?
Rentvesting is a market-entry strategy in which you rent the property you want to live in and purchase an investment property that suits your budget.
“In capital cities, where a high proportion of first home buyers want to live, there is a significant difference between the cost to rent and the cost to buy,” says Reventon founder and CEO, Chris Christofi.
“Through rentvesting, you can rent where you want to live while also paying off an investment property in a cheaper suburb.”
While rentvesting can offer the best of both worlds for many buyers, Chris says it always comes down to your individual circumstances and financial situation.
Let’s take a look at the pros and cons of rentvesting, and find out if it’s right for you…
The pros and cons
There are three key benefits of rentvesting: lifestyle, wealth building and tax savings.
- Lifestyle
“There are lots of reasons you may want to live in a particular area, such as proximity to work and schools, family or lifestyle advantages,” says Chris.
“Despite record-low vacancy rates, rentvesting allows for more choice of neighbourhood, which improves overall satisfaction and happiness. And this happiness only grows as the benefits of owning an investment property manifest.”
- Wealth building
While rentvesting means delaying principal place of residence ownership, Chris says it allows you to start building a portfolio of investment properties.
“If you’re in a less than ideal financial position to seek approval for the property you want, rentvesting offers the most immediately affordable path to property ownership,” he continues. “Your costs are largely predictable and your borrowing potential increases, in turn giving you more opportunity to build wealth through property investment.”
- Tax savings
Chris says it’s also important to consider the tax benefits of owning an investment property.
“You should only pay around 20 per cent of the cost of your first investment property,” he says.
“When you buy a principal place of residence, you incur 100 per cent of the mortgage repayment costs. But, when buying an investment property, your tenants and the taxman will cover approximately 80 per cent.”
So, what about the cons?
Like in all situations, there are potential downsides to rentvesting.
- Capital gains tax
“If you choose to sell your investment property, you’re subject to capital gains tax,” says Chris. “This means you’ll pay tax on the profit you make in the sale.
- Uncertainty of accommodation
Chris says another con is the uncertainty of renting, especially given landlords can legally terminate tenancy agreements in as little as 14 days in Victoria.
“However, again, this comes down to your personal situation and what risks you’re comfortable taking,” he says.
What about the Great Australian Dream?
Whether it’s a home among the gum trees or in the middle of the city, owning your own home is the Great Australian Dream. Or is it?
Did you know, that 53.9 per cent of Australians believe the traditional Great Australian Dream is no longer relevant? In fact, more than 70 per cent of Australians said there is a need to reimagine the Great Australian Dream to suit our current reality.
Chris concedes that rentvesting means the home you choose to live in isn’t actually yours, which limits your ability to make it your own.
“However, it does give you financial freedom and security as your property portfolio grows,” he says. “And it seems that, for more and more people, that is actually the Great Australian Dream.”
But… isn’t rent money dead money?
Chris says it’s a common misconception that you should own your own home before buying an investment property. In fact, in 2018, one in every three first homebuyers was a rentvestor.
“With high property values in Australia’s capital cities, many first home buyers are using all their available credit to purchase their principal place of residence,” he says.
“While it may feel good to pay down something you’ll eventually own, your money is not working as hard as it could be.”
So, what’s the verdict?
Like with all decisions, the choice to rentvest or buy a principal place of residence all comes down to your individual circumstances and financial situation.
“Rentvesting might be a viable option to enter the property market or to pull capital out of your principal place of residence,” says Chris. “However, as you build a profitable property portfolio, you may choose to buy a home with your increased earnings.
“It’s a very personal decision, but it always helps to have expert advice.”
To find out if rentvesting is right for you, contact Reventon today!