Rentvesting - What You Need to Know in 2025

Is Rentvesting your 2025 strategy?

While the concept of Rentvesting may not be new to seasoned property investors, it is increasingly becoming a popular strategy among the younger generation of aspiring homeowners — particularly those priced out of expensive capital cities.

So what is the concept of Rentvesting? Rentvesting is a property investment strategy where individuals rent a home to live in while simultaneously purchasing an investment property in a more affordable or growth-oriented area. Rather than leaving their savings idle, many buyers are choosing to rent in their desired urban location, one that suits their lifestyle, while simultaneously investing in more affordable regional property markets.

The souring property prices, especially in major cities, has left many first-home buyers trailing behind. For many buyers, this sharp growth has made purchasing in their preferred suburbs unattainable — even with solid deposits and borrowing capacity.

In response, more buyers are turning to Rentvesting. This approach enables them to continue renting in their ideal neighbourhoods while investing in markets with lower entry points, strong capital growth potential and higher rental yield. Rather than trying to buy into an overheated city market, Rentvestors are opting to use their deposits to purchase in regional areas, with the goal of building a portfolio that will eventually enable them to re-enter the capital city market at a later point.

A survey of 18 to 25-year-olds revealed that one-third aspired to rent and work in a major city while owning an investment property in a lifestyle or holiday destination. Additionally, 40% saw property investment as a way to secure their financial future and 37% were motivated by the opportunity to generate additional income.

In Brisbane, Rentvesting is gaining traction among first-home buyers as well. The city’s housing market has surged since 2021, with both metropolitan and surrounding regional markets recording strong performance. During the pandemic, regional markets often outperformed their metro counterparts, so many investors have achieved rental returns that not only cover their mortgage repayments but, in some cases, generate positive cash flow.

However, experts advise caution, while recent growth in regional markets is promising, Rentvesting remains a long-term strategy. Short-term gains should not be expected, and investors are encouraged to focus on properties with sustainable growth and income potential over time. This type of growth far exceeds what many could save on their own. Through Rentvesting, their money is put to work in the market, building equity while they continue to rent and save.