The traditional path to home ownership save a deposit, buy the home you live in, and pay it down for 30 years, is no longer the only, or even the most financially efficient, route for many Australians. A growing strategy called rentvesting is redefining how first home buyers approach property ownership, particularly in high-cost markets like Sydney and Melbourne.
Rentvesting means renting where you want to live while simultaneously owning an investment property in a more affordable location. Instead of sacrificing lifestyle to buy in your preferred suburb, you purchase an investment property loan in a growth corridor, and rental income can help cover some of the costs of holding the investment property. At the same time, you continue renting the place you prefer to live. Use the rental income to offset your rent. Over time, you build equity in the investment property while maintaining the lifestyle flexibility that comes with renting.
This guide explores how rentvesting works, who it suits, the financial advantages and risks, and how it applies specifically in growth areas like Riverstone, Schofields, Marsden Park, and Sydney’s north-west corridor areas, where OM Financial’s team has deep local knowledge.
What Is Rentvesting?
Rentvesting is a hybrid property strategy:
• You rent: A property in the suburb or city you want to live in, close to work, lifestyle amenities, or family
• You own: An investment property in a more affordable area with strong growth potential and rental demand
The investment property generates rental income that partially or fully offsets your own rent. You benefit from property ownership, capital growth, and tax deductions without compromising on where you live.
Why Is Rentvesting Growing in Popularity in 2025?
Sydney and Melbourne Affordability Constraints
Median house prices in Sydney’s inner suburbs and Melbourne’s desirable zones have placed direct ownership out of reach for many first home buyers, even with government assistance. Rentvesting allows buyers to get into the property market now in an affordable area without waiting years to accumulate a deposit for a property they actually want to live in.
Strong Growth in Regional and Outer Suburban Corridors
Areas like Riverstone, Schofields, Marsden Park, Rouse Hill, Box Hill, and Kellyville Ridge continue to attract strong investor and owner-occupier demand, driven by infrastructure investment, population growth, and relative affordability. First home buyers purchasing investment property loans in these corridors are accessing growth markets with strong rental yields.
Tax Advantages of Owning an Investment Property
Owning an investment property allows you to claim tax deductions on:
• Loan interest payments (generally tax-deductible against rental income)
• Property management fees
• Council rates, water, insurance
• Depreciation on building and fixtures (for new or near-new properties)
• Maintenance and repairs
Through negative gearing, where your investment expenses exceed rental income, additional deductions may be claimable against your total taxable income.
The Financial Mechanics: How Does Rentvesting Work?
Example scenario: first-home buyer in Sydney’s Hills District:
• Rent paid: $2,200/month for a 2-bedroom apartment in Norwest
• Investment property purchased: 3-bedroom house in Riverstone, $720,000, 10% deposit via First Home Guarantee
• Rental income: $600/week ($2,600/month) from investment property tenant
• Loan repayment (P&I, 5.5%): ~$3,680/month
• Net property cost: $3,680 − $2,600 = ~$1,080/month out-of-pocket for the investment property
• Tax deductions: Interest component, depreciation, and management fees reduce taxable income, partially offsetting the $1,080 net cost
Meanwhile, the $720,000 property in Riverstone appreciates. In 3 to 5 years, the built equity can be used to purchase the owner-occupier home in the preferred suburb.
When Does Rentvesting Make the Most Sense?
• You live in a high-cost city and cannot afford to buy where you want to live
• You are in your mid-20s to late 30s and value lifestyle flexibility over the short term
• You want to enter the property market now rather than saving for 5 to 7 more years
• You are comfortable managing or delegating the responsibilities of being a landlord
• You have a stable income that can service the investment loan even during periods of vacancy
The Risks of Rentvesting to Consider
• Vacancy periods: If the investment property is vacant, you still pay rent on your own accommodation plus the full mortgage. A 3- to 6-month cash buffer is essential
• No First Home Owner Grant on investment properties: In most states, purchasing your first property as an investment rather than owner-occupied disqualifies you from FHOG cash grants (though First Home Guarantee may still apply depending on state rules)
• Capital gains tax: When you eventually sell the investment property, capital gains tax applies (reduced by the 50% CGT discount if held for 12+ months). This does not apply to an owner-occupied principal place of residence
• Dual holding costs: Rent plus mortgage creates a higher monthly outgoing than either alone
Rentvesting in Sydney’s North-West: Riverstone, Schofields, Marsden Park
Sydney’s north-west growth corridor continues to offer a compelling combination of affordability, infrastructure investment (Metro Northwest extension, NWRL), strong rental yields, and consistent capital growth. For rentvesting first home buyers, purchasing an investment property in Riverstone, Schofields, or Marsden Park provides access to a growing tenant pool (families, couples, and professionals who cannot yet afford to buy in the area) while building equity in a market with strong fundamentals.
OM Financial’s team of mortgage brokers works with investors across these suburbs and can structure your investment property loan and potentially your rentvesting strategy from a single, coordinated consultation.
Frequently Asked Questions: Rentvesting in Australia
Can I use the First Home Guarantee for a rentvesting strategy?
Answer: The First Home Guarantee is designed for owner-occupiers, meaning the buyer must intend to live in the property. It cannot be used for a pure investment purchase. However, some renters purchase a property intending to move in first, then convert to an investment after fulfilling the residency requirements. Eligibility conditions vary — speak to your home loan broker in Australia for guidance on your specific circumstances.
How do I get finance for a rentvesting strategy?
Answer: A home loan broker in Australia will assess your full financial position, including current rental costs, investment loan serviceability, and any government scheme eligibility. The investment property loan assessment is based on your income, the rental income (typically assessed at 70–80%), and your expenses.
Is rentvesting right for everyone?
Answer: No. Rentvesting suits buyers who are comfortable with the dual complexity of being a tenant and a landlord, have a stable income, and prioritise entering the market quickly over owning the home they live in. For buyers who strongly prioritise security of tenure and the ability to personalise their living space, a direct owner-occupier purchase may be more appropriate despite the higher entry cost.
Explore Rentvesting With OM Financial
OM Financial’s experienced team of investment property loan brokers can help you model the numbers for a rentvesting strategy, compare home loan rates in Australia for investment properties, and identify the most suitable product structure for your goals.
Call 0478 876 967 or book your free consultation at omfinancials.com.au. Follow OM Financials on Instagram, Facebook and LinkedIn for first home buyer guidance, investment property finance insights, home loan updates and practical tips for Australian property buyers.