Should you rentvest or buy to live in?

Rentvesting means renting a home in the suburb where you want to live — typically an area you can't yet afford to buy in — while simultaneously purchasing an investment property in a more affordable location. The investment property earns rental income that helps cover mortgage repayments, and the property builds equity over time. It is a popular strategy in Sydney and Melbourne, where inner-suburb prices are far beyond what most first-time buyers can afford.

It depends on the numbers. Rentvesting tends to outperform owner-occupying when: the investment property is in a high-growth, high-yield market; your rent-paid is significantly lower than what a mortgage on your preferred home would cost; and you invest the cash flow surplus into shares. Owner-occupying wins when the home you'd buy is in a strong growth market and rental yields on investment properties are thin. The calculator compares both year by year so you can see which comes out ahead for your specific assumptions.

Investment properties can be negatively geared — if deductible expenses (mortgage interest, depreciation, maintenance, management fees) exceed rental income, the loss reduces your taxable income. Owner-occupied homes have no equivalent deduction. The trade-off is that your investment property is subject to Capital Gains Tax (CGT) when you sell, whereas a home you live in is usually fully CGT-exempt as your main residence. If you hold the investment property for more than 12 months before selling, you qualify for the 50% CGT discount.

Yes. The First Home Owner Grant (FHOG) requires the property to be your principal place of residence for a minimum period. If you buy an investment property first, you forfeit the FHOG on that purchase. However, in most states you may still be eligible for the FHOG later if you subsequently purchase a home to live in and have never previously owned and lived in a home — the rules differ by state, so check your state revenue office for current conditions before deciding.

The same deposit rules apply to investment properties as to owner-occupied homes: lenders typically require at least 10–20% of the purchase price, with 20% avoiding Lender's Mortgage Insurance (LMI). However, some lenders treat investment property loans as higher risk and may require a larger deposit or charge a higher interest rate. As of 2026, the typical investment mortgage rate runs 0.2–0.5% above the equivalent owner-occupier rate.

Gross rental yields in Australia range widely: inner-city apartments in Sydney and Melbourne typically yield 2.5–3.5%, while regional centres and some outer suburbs can yield 4.5–6%. A useful starting point is 3.5–4% gross, translating to roughly 2.5–3% net after expenses. Check recent comparable sales and rental listings in the area you're considering — the calculator lets you enter actual weekly rental income based on market evidence.

Yes — once your investment property has built sufficient equity (typically after 5–10 years of growth), you can use that equity as a deposit for an owner-occupied home. This is one of the key long-term benefits of rentvesting: building a property asset base that eventually funds the move into a home you own and live in. The equity release process involves refinancing the investment loan and using the released funds as a deposit on your next purchase.

Rising interest rates increase mortgage repayments, which can tip a positively geared investment property into negative cash flow — meaning your combined rental income no longer covers mortgage costs, and you need to fund the shortfall from your salary or savings. This is why a cash flow buffer is critical for rentvestors. The strategy is most resilient when: rental income is close to or above the mortgage repayment; you have a substantial emergency fund; and the property is in a market where rents rise in line with rate increases.