Rentvesting | Pros and cons for property investors - NAB

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What is rentvesting?

Rentvesting is when you rent a home in the area where you want to live, while buying an investment property in another location. It may appeal if buying where you live feels out of reach, but you still want to enter the property market.

However, there are trade-offs as well. You’ll need to consider your deposit, rental costs, home loan repayments, property expenses, tax treatment, tenant demand and how comfortable you are managing an investment property you don’t live in.

Why some people consider rentvesting

This property investment strategy separates where people live from where they buy. For example, you may want to keep renting near work, family, study or lifestyle amenities, while buying an investment property in an area that better suits your budget.

This can give you more flexibility than only looking for a home to live in. It may also help you start building experience as a property owner sooner than if you were waiting to buy in your preferred suburb.

Rentvesting doesn’t remove the need for careful planning. You’ll still need to understand your borrowing capacity, costs and expenses and whether the strategy fits your longer-term plans.

What to weigh up before rentvesting

The strategy can offer flexibility, but it also adds financial and practical responsibilities. Before deciding whether it works for you, it’s worth looking at both the potential benefits and the risks.

Potential benefits

Rentvesting may help you:

  • live in an area that suits your lifestyle while buying elsewhere.
  • enter the property market in a location that may be more affordable.
  • build equity over time if the property increases in value.
  • receive rental income that may help offset some property costs.
  • use property as part of a broader investment plan.

Things to consider

Rentvesting also means you may need to:

  • pay rent where you live as well as home loan repayments on the investment property.
  • cover upfront costs such as your deposit, stamp duty and other purchase costs.
  • allow for ongoing expenses such as maintenance, insurance, council rates and property management.
  • manage vacancy periods or changes in rental income.
  • understand that tax treatment and government scheme eligibility may differ from buying a home to live in.

Choosing between a new build vs. an established property

As a rentvestor, you may need to decide what type of investment property to buy. One common comparison is whether to buy a new build or an established property.

There isn’t one option that suits everyone. The better fit depends on your budget, location, cash flow, maintenance expectations, tenant demand and long-term plans.

New build

A new build may appeal if you want a newer property with modern features and potentially fewer immediate repairs. This can be helpful if you’re renting somewhere else and prefer an investment property that may need less hands-on maintenance early on.

You’ll still need to look closely at the location, expected completion timing, total purchase costs, local rental demand and how much similar properties are available in the area. If there are many comparable new properties nearby, it’s worth thinking about how that could affect tenant demand or future resale appeal.

Established property

An established property may appeal if you’re looking at an existing suburb with known rental demand, transport links, schools, shops or other local amenities. It may also give you more visibility over comparable rents and recent sales in the area.

The trade-off is that property condition becomes more important. You may need to allow for repairs, maintenance, renovations or upgrades, especially if the property is older. These costs can affect your cash flow, particularly while you’re also paying rent where you live.

Questions to compare a new build and an established property

Before choosing, ask:

  • What can I comfortably afford after allowing for rent, loan repayments and property costs?
  • How much cash flow buffer would I have if the property was vacant or needed repairs?
  • Is my priority lower maintenance, location, tenant appeal or potential to improve the property over time?
  • Am I comfortable managing this property if I don’t live nearby?
  • Could the property type affect my costs, tax position or eligibility for any schemes?
  • Do I need independent tax, legal or financial advice before deciding?

Can you afford to rentvest?

You'll need to be comfortable managing two housing commitments: the rent for the home you live in and the costs of the investment property you own. Before you buy, it’s important to understand how both will fit into your budget.

You may need to allow for:

  • your deposit and purchase costs
  • loan repayments
  • rent where you live
  • property management fees
  • council rates, insurance and maintenance
  • possible vacancy periods
  • changes to interest rates or rental income
  • an emergency fund for unexpected costs.

It can help to stress test your budget before you commit. For example, consider whether you could still manage your costs if repayments increased, your rent changed, or your investment property was vacant for a period of time.

How rentvesting could fit with your longer-term plans

It may suit some people as a stepping stone, while others may see it as a longer-term investment strategy. Before deciding, think about what you want the property to help you do.

You might be aiming to:

  • build equity over time
  • enter the property market while continuing to rent
  • buy in a location with stronger investment potential
  • keep flexibility in where you live
  • eventually sell, refinance or buy a home to live in.

Your timeline matters because property costs can be high in the short term. Buying and selling too quickly may reduce the benefit of the strategy, especially once you factor in purchase costs, selling costs and any tax implications.

Buying in another suburb, city or state

Rentvesting can give you the option to buy outside the area where you live. This may open up more locations, but it also means you’ll need to do careful research.

Different suburbs, cities and states can have different property prices, rental markets, taxes, rules and buyer costs. If you’re buying somewhere you don’t know well, consider the local economy, tenant demand, vacancy rates, infrastructure, transport, amenities and future supply of similar properties.

You’ll also need to think about how the property will be managed if you’re not nearby. A property manager may help with inspections, tenants and maintenance, but their fees should be included in your budget.

Is the strategy right for you?

Before deciding, consider whether you:

  • have a clear reason for rentvesting.

  • understand your borrowing capacity.

  • can manage rent and investment property costs.

  • have a buffer for unexpected expenses.

  • are comfortable with tenant, vacancy and maintenance risks.

  • understand how tax and government scheme rules may apply to your situation.

  • have spoken with the right professionals for lending, tax or legal advice.

Ready to purchase your investment property?

If you’re looking to invest in property while you rent, talk to our home experts today.

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How rentvesting works

​Investing in property? Know the costs before you buy

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Use our detailed guide to understand how to choose between buying an investment property and your first home.

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The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, NAB recommends that you consider whether it is appropriate for your circumstances. NAB recommends that you seek independent legal, financial and taxation advice before acting on any information in this article.

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