September 23, 2025 • 24 mins
The age-old dream of home ownership is being reimagined by a new generation of Australians facing unprecedented housing challenges. Caught between soaring property prices and stagnant wages, many are asking: should I buy where I can afford or rent where I want to live?
Rentvesting—renting in your preferred location while investing in property elsewhere—has emerged as a powerful alternative strategy. The numbers tell the story: home ownership rates have dropped from 71% to 66% over the past 25 years, while first-home buyer investors jumped 12% in just one year. Even more telling, 61% of New South Wales residents are now considering this hybrid approach.
We dive deep into both paths, examining what each truly offers. Traditional home ownership provides undeniable security, equity-building, and that profound sense of belonging that comes with having your own place. Yet it demands significant sacrifice—high upfront costs, reduced flexibility, and often compromising on location or property type.
Rentvesting flips this equation. It allows you to maintain your lifestyle in premium locations while strategically building wealth through property investment in high-growth areas. You gain tax advantages, potential rental income, and retain the freedom to relocate as life changes. However, this approach requires financial discipline, comfort with property management responsibilities, and acceptance that you don't own where you live.
Your decision ultimately hinges on personal priorities. Are you seeking immediate stability or building long-term wealth? Do you value location flexibility or the emotional satisfaction of ownership? We provide a practical framework to help you navigate this complex choice, with real examples of Australians who've successfully employed both strategies.
Whatever path you choose, understanding the full picture—beyond the standard "rent money is dead money" clichés—is essential for making property decisions aligned with your unique financial goals and lifestyle preferences. Have you considered which approach might work best for your situation?
🎧 Enjoyed this episode?
Follow us on Instagram @zekeguenthrothofficial @oscardonproperty and @assetroad for daily insights, property breakdowns, and behind-the-scenes updates.
Explore more at www.assetroad.com.au
Top 10 Finance Podcasts in Australia on Feedspots ranking- https://podcast.feedspot.com/australian_personal_finance_podcasts/
Disclaimer:
The information provided in this podcast is general in nature and does not constitute personal financial advice. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. Asset Road Pty Ltd recommends you seek independent financial, legal, taxation or other advice as required. All investments carry risk. Past performance is not indicative of future results.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Would you rather rent a place you love in the city,
close to the cafes, beaches andnightlife, while secretly
building wealth in a suburbyou've never even visited?
Or would you rather stretchyourself to the limit, take on a
massive mortgage and finallyown a place you can truly call
yours, even if it means livingfurther out, cutting back on
lifestyle and watching interestrates like a hawk?
(00:21):
This is the choice so manyAussies are facing right now.
With house prices climbing,wages not keeping up and rents
hitting record highs, the bigquestion is should you rentvest
or should you own the home youlive in?
Welcome back to another episodeof the Finance Bible Podcast.
(00:50):
Zeke here and your co-host,oscar.
But before we get into it,please note that nothing in this
podcast should ever beconsidered as personal financial
advice.
Of course, if that is what youare seeking, reach out.
We'll get you in touch with thecorrect professionals.
Get the job done properly.
Sit back, relax and enjoy theshow.
Let's get into it.
(01:13):
Welcome back to another episodeof the Finance Bible Podcast.
Today you're with Oscar onceagain, and today's topic might
be one of the most importantdecisions for yourself that
you're trying to figure out.
Well, definitely, it's for manyAustralians, especially the
younger demographic.
And the topic is and thequestion is should you rent vest
(01:33):
or should you buy a home tolive in?
You've no doubt heard bothsides of the story.
You've probably got a friend's,cousin's brother who tells you
that you have to buy a house,you have to live in it, you've
got to get your own mortgage andpay that off.
And then you might have yourother friend's cousin's uncle
who talks about how good rentvesting is and tells you why you
(01:55):
need to get into rent vestingat a young age and how you can
get steps ahead.
So some people say owning ahome is the ultimate goal.
You've got your security, prideand building equity, which are
probably the main three.
But others argue that intoday's market rent vesting is
not just smart but it's actuallyessential because a lot has
(02:18):
changed since our parents werein their 20s, when buying a home
back then was the smartestdecision and the normal decision
.
But now, with house pricesrising, wages not keeping up,
everything's becoming soexpensive.
Do you look at rent vesting?
In this episode we'll walkthrough what rent vesting
(02:40):
actually is.
I'm sure you might've heard ofit it is a bit of a buzzword the
last two years but we'll talkabout what owning offers as well
.
The trade-offs are both therisks, real numbers and some
stories.
So some real client scenariosand ideally, by the end, my aim
is that you'll feel moreconfident about which path might
be right for you in terms ofwhich side of the fence do you
(03:03):
go.
Do you buy the house that youwant but you've got to
compromise on the locationbecause of your price?
Or do you rent vest and investin a high growth suburb,
interstate or locally, while yourent where you want to live?
So firstly, let's just definethe terms.
So when I talk about owning ahome, this means buying a
(03:23):
property that you live in, yourowner-occupier, your principal
place of residence.
You have a mortgage or you maypay it off in time, and you live
in that property and that isall it is.
The property is not paying youmoney, as in rental income,
because you're living in it.
You're paying your own mortgageoff.
The other term is rent vesting.
(03:44):
So this is a hybrid strategy.
This is where you rent whereyou want to live because maybe
it's too expensive to buy there.
Like, for example, let's say,you're in Melbourne and you want
to live and buy a property inArmidale, which is historically
a quite expensive suburb.
You may not afford to livethere or buy there.
Expensive suburb you may notafford to live there or buy
(04:07):
there.
So you rent a property inArmidale because you love the
area and you buy a $500,000property interstate which grows
at a good rate and pays you anincome, and then that gets you
one step ahead while you'restill renting and living in the
area that you like.
So yeah, rent vesting is whereyou rent where you want to live,
while you own an investmentproperty somewhere else, often
where prices are more affordableor growth is promising.
(04:28):
The main goal and idea of rentvesting is that your investment
property builds you equity andcapital growth, possibly
providing you rental income,ideally paying your mortgage for
you you can find in some areas,hence speak to professionals
like ourselves.
Also gives you tax benefitswhen you invest in property,
which is great, while you getthe lifestyle, flexibility and
(04:50):
where you want to live.
So it's owning plus rentingcombined in different locations.
Understanding the currenthousing statistics in Australia
does help us see why rentinvesting is growing in
conversation and becoming moreand more popular.
I've got a few differentstatistics here to talk about
just before we get into a bitmore detail, but over the past
(05:13):
25 years, australia's homeownership rate has fallen from
71% to 66%, showing that homeownership is declining, which it
makes sense, because the pricesof properties have been rising
drastically.
And then you've got the wageincreases and inflation.
It's not keeping up.
(05:34):
So individuals and the youngerindividuals are really
struggling to get into theirhomes, as in owner-occupier
homes and even investmentproperties, because even a
$500,000 property is still youneed at least 50 grand for a 10%
deposit.
So that's even a bit of moneyto save for.
Another statistic is rentvestings on the rise.
(05:56):
So, for instance, first homebuyer investors, people buying
their first home but not to livein it secured 8,300 loans in
2024, which was up 12% from theprevious year.
So those numbers are stillincreasing now as we're in 2025,
but even last year it wasalready 12% increased, which
(06:18):
shows that rent vesting you know, even 12 months ago is becoming
more and more popular.
Another statistic Westpac's homeownership report shows that in
New South Wales, 61% of peopleare considering rent vesting,
victoria 54% and Queensland 52%.
It's obvious why New SouthWales is 61% because Sydney is
(06:41):
so expensive, especially in theeastern suburbs and the beaches
up north, the northern beaches.
So everyone here is looking torent there.
So I, for example, I live inSydney, renting in Sydney, but
invest interstate.
I am one of those numbers.
So Victoria is the same.
(07:02):
Obviously, the last few yearsthe properties haven't been
rising as much as they used to,but it's still expensive.
So you've got nice areas orexpensive areas like South Yarra
, toorak, armadale, paran,richmond, all those areas around
there which are extremelyexpensive to buy in there.
So a lot of individuals andpeople I know are buying 30 to
(07:26):
60 minutes out of Melbournebecause they can't really afford
to buy in the areas that theywant to.
So this is just showing why 54%of people are saying I don't
want to do that.
I'd rather live where I want tolive and buy interstate and
Queensland as well 52%.
Queensland is rising inproperty prices as well.
Brisbane actually overtookMelbourne the other month in
(07:49):
terms of average property pricesin the country.
So at the moment, sydney,brisbane and Melbourne, which is
pretty interesting.
And then we've got one of thelast statistics here.
So your average weekly housingcosts interesting.
And then we've got one of thelast statistics here.
So your average weekly housingcosts in the last 12 months
owners with a mortgage.
So owner-occupier house paidaround $493 per week and renters
(08:09):
paid around $379 per week.
So if you're renting, you'resaving around $110 a week.
Just on these statistics.
But with saying that, itdepends if you are rent-vesting
is your investment property?
Is that paying for itself?
Are you putting a little bit ofmoney into that?
Are you putting a lot of moneyinto that?
So, pending how your investmentproperty is structured, with
(08:30):
the loan side of things and theactual property and the rental
yield, you may be better off oryou may actually be spending the
same as someone with anowner-occupied.
But with these statistics itjust shows you that generally,
renters are saving more moneyper week.
So we'll start with the pros ofowning a property, as in your
(08:50):
principal place of residence,because there's so many pros for
both sides, so manydisadvantages of both sides.
But the number one pros whicheveryone wants and this is why
everyone wants to buy a house,apart from the you know the
instagram photo of outside there, the property board with the
sold sticker is security andstability.
So owning a home that you livein gives you security of your
(09:16):
tenure.
So you don't have to rent.
You don't have to risk rentincreases to yourself or
eviction.
You have complete control overthe property.
You can have your own pet, youcan renovate as much as you want
, you can do any changes thatyou want, any landscaping the
list goes on.
You have full control of theproperty.
If you are in a strata complexor an apartment building, this
(09:38):
may be a little bit more limitedin terms of what you can and
you can't do, but most of thetime you have complete control
of what you want to do with theproperty.
Number two is it's for savingsand you're also building equity,
so every mortgage payment thatyou make is, technically
speaking, building ownership.
So it's separating the gap ofequity.
(10:00):
So over time, as you pay offyour principal, your wealth in
that asset increases.
So this just gives you extramoney, technically speaking, to
use to invest in anotherproperty or to buy another
property or to take the moneyout and put it towards something
else.
Number three this is anextremely common one.
Everyone becomes emotional andthey need the property for
(10:24):
psychological benefits as well.
When individuals look forproperties, many people feel a
sense of accomplishment,belonging and stability with a
certain home.
It's your home, it offerslifestyle certainty and it's
kind of a status symbol which alot of people strive towards, as
funny as that sounds.
Number four, in terms of proswhich we've come up with is the
(10:48):
potential for capital growth,which is why everyone goes into
property, because it's a greatasset to have in terms of growth
.
So if the area appreciates, youbenefit.
If you buy well over 10 to 20years, obviously the property
can deliver solid growth.
Property itself generallydoubles every 8 to 12 years.
So if you did hold it for over10 to 20 years, it probably
(11:12):
doubles twice, generallyspeaking.
On the other side of the fence,let's talk about some of the
cons of owning your own home.
So getting into the home.
Number one you've got your highupfront and ongoing costs.
You've got your deposit, whichis the hardest bit to actually
get From 1st of October.
You've got the 5% first homebuyer deposit scheme coming into
(11:33):
things, so that's actuallygoing to help a lot of people
with their initial deposit.
But you've got, apart from yourdeposit, you've got stamp duty.
You've got your property taxes,your maintenance rates,
insurance and your mortgagepayments.
Definitely within the firstfive years are extremely high
and, pending when you buy theproperty, the interest rates can
(11:54):
really make an impact on youroverall repayments.
You might want to fix them.
You might go variable butpending on what's happening in
the market.
This is where a mortgage brokercomes into play.
But this can vary your pendingon what's going on in the
economy at the time.
Another con is you got lessflexibility.
So In terms of your personallife, if you want to move jobs,
(12:17):
cities, anything, your lifestyleor your family, it can be a lot
harder because you have to sellyour property unless you rent
it out.
But most of the time peoplecan't afford to rent it out
because the rent won't cover theexpenses.
So it just makes a bit of aheadache in terms of what you
can do.
You might feel a little bitstuck if you're wanting to leave
(12:39):
and, for example, you mighthave lived in Melbourne for your
whole life and then you wake upone day and say I want to move
overseas.
Well, you've bought a house andif you did want to move
overseas, you most likely wouldlook at selling it.
Which you're selling can incurlots of costs and obviously
delays and when you want toleave.
So it just gives you a bit lessflexibility.
(13:01):
Number three lifestyle trade-off.
So to get into a good area, youmay need to compromise.
You might buy somewhere furtherout, you might buy a smaller
place, you might take on ahigher debt.
So you've got to figure thatout with yourself and what
you're open to compromise on.
Number four opportunity cost.
So money tied up in a principalresidence could be invested
elsewhere and depending whereyou bought.
(13:25):
Let's say, for example, thelast four years or so in
Melbourne has been prettyaverage in terms of property
growth.
If you bought a property forthe same price interstate in a
high growth suburb, you couldhave got a lot more back in
terms of your investment andbought multiple properties in
the same time because capitalgrowth you're purchasing a good
(13:46):
location.
So this just shows that it's anopportunity cost and you got
money tied up in an asset.
So if you're really certain andyou really want to live there,
do it.
But if you're more looking atbuilding wealth over time, there
could be other strategies foryou.
Also, your home doesn'tgenerate rental income or any
tax benefits in the same waythat investment property might,
(14:07):
which, if you do have a highincome, the tax benefits will
definitely help you with aninvestment property.
So they're the pros and cons ofa owner-occupier property.
So now let's go to the rentvesting side of things.
So obviously the number one profor rent vesting is your
lifestyle flexibility.
You can live where you want tolive.
(14:28):
Is it in a city?
Is it close to work?
Is it right next to the beach?
You might want to livesomewhere which has great
amenities, but without needingto buy there, which is the most
important thing.
You rent your preferredlocation but don't need the
price tag.
Number two and this is one ofthe reasons I am a rent investor
is you can look at strategicinvestment.
You can buy in areas wheregrowth is reasonable, prices are
(14:52):
low and affordable and therental yields great, and look
after itself, as in terms of themortgage, you let your
investment property do all theheavy lifting for you.
Number three potential taxadvantages, like I spoke about
before.
So with an investment property,obviously you get your rental
income.
You can also claim up to 40years of depreciation of your
(15:12):
investment property.
You can claim the interestallowable with deductions under
certain conditions with yourmortgage repayments, and these
can help offset costs as well.
So if you do have a higherincome, the tax advantages of a
investment property woulddefinitely help you with your
tax return and reducing your tax.
Number four building wealthwhile renting.
(15:34):
So if things go well and you'vebought in a good location and
you've done things in a goodmanner, the investment property
appreciates and generates income, giving dual benefits to
yourself lifestyle andaccumulation.
Now let's talk about some of thecons of rent vesting.
Number one you're still rentingyour own home so you don't get
(15:55):
the full emotional or securityupside of owning where you live.
You know you might cop a bit ofrent increases, possible
landlord issues, less controlover living environment.
This con, you know it can bebad for some people but if your
mindset's kind of like happy toyou know, rent somewhere while
you're building wealth, itdoesn't really matter.
(16:16):
But I know some people get abit funny with renting and they
say rent money is dead money,which I don't necessarily
believe in.
But that's just one of the cons.
Number two you've gotmanagement complexity, so being
a landlord involves moreresponsibilities.
You've got to find tenants,you've got maintenance,
vacancies, dealing with tenantsand if things go wrong it can
(16:38):
cost time and money.
So a way to avoid this anywayis looking at getting a property
manager.
One of the big mistakes manyrent investors find is they want
to look at managing theproperty themselves, which, if
it's interstate.
Good luck trying to manage yourown investment property because
, firstly, you may not know themarket, you don't know the
(16:58):
average rental yield in thatarea, you don't know really how
to get things set up.
So finding a property managerif it is an interstate property,
it's just essential.
Number three costs and risks.
So you may have extra costs.
So travel, if you visit yourinvestment property.
You've got property managementfees, you got vacancy periods
(17:19):
and look, investment propertyyields might not always be great
.
So this comes back to yourresearch and your due diligence
before you invest in theproperty.
So make sure that you've doneall this and you've checked all
these out, because if you can'tafford ongoing property
management fees or your propertybecomes vacant for six months
by chance and something rarehappens, you need to make sure
that you can afford the mortgagerepayments in that time.
(17:42):
Because if you can't, well,that's when trouble starts to
happen and you may end up havingto sell the property and pay
some fines.
So that's where you need to doyour research and actually
crunch the numbers first beforeyou dive into it.
Because when you sayreinvesting, it's not all
sunshine and rainbows.
There are some horror stories.
So you really need to just becareful and know what you're
(18:03):
doing.
Number four this is quiteimportant is financial
discipline is needed.
So you need to manage bothcosts of your own rent plus your
cost of your investmentmortgage or a portion of.
Let's say, you only put in 50bucks a week because your
investment property pays theother $350, or, let's say,
(18:23):
you've got to pay the wholething.
So you need to look at managingthe whole thing.
Also, manage your expenses andmake sure your cashflow works.
So this just requires goodplanning and risk management
which, like I said just before,before you get into an
investment property, youdefinitely do need to look at
all this.
So the next part of this is Iwant to share an example a real
(18:44):
example, actually, just one ofthem that came across a couple
of years back for a couple ofclients who actually approached
us.
So I'm not going to use theirreal name, but we had a client,
let's say, emma in, in her late20s.
She works in Sydney, cbd.
Her main dream was living closeto work, cafes, the beach,
(19:05):
having a great lifestyle.
She realized that buying inSydney near the city was
extremely expensive.
So, first of all, you need anextremely high deposit amount
and then, even if you get thedeposit amount.
You then got the big mortgagerepayments ongoing for at least
30 years.
So that was the first issuethat she ran into.
(19:26):
She had two options.
Option A was buy in the outersuburbs far from work.
So if she did this you'd haveto increase her commute time to
work.
Lifestyle would compromise, shewouldn't be near the beach.
She wouldn't be near the beach,she wouldn't be near the cafes
and it just wouldn't reallyalign with what she wanted.
The second option, option B,would be rent near her ideal
(19:47):
location.
So you're talking about anapartment in the inner city and
look at buying an investmentproperty in a growth region, say
in Queensland, perth at thetime, wherever it may be, or an
affordable town with good growthpotential.
Here she rents for $600 a weekin the inner city of Sydney and
(20:09):
she buys an investment propertyfor around $600,000 in a high
growth suburb with a rentalincome of around 5%.
So over 10 years thatinvestment property might grow.
Her renters pay down part ofher mortgage and meanwhile her
lived in residence gives herwhat she wants in terms of daily
living.
So in 20 years she'll be ableto look at utilizing the
(20:31):
substantial amount of equityalong the way to use that
deposit for more properties orfinally get the house that she
wanted to in Sydney.
So this just shows that rentvesting allows you to do what
you're wanting to do withoutcompromising your lifestyle.
Now, before we wrap up, thereare a set of questions and a bit
(20:53):
of a checklist like I did thelast episode that you can use if
you're trying to decide whetherrent, investing or owning your
own property makes more sensefor you.
So there's five questions I'vecome up with.
Number one what are yourlong-term goals?
Do you plan to stay in oneplace?
Do you see yourself movingcities, moving jobs?
How important is proximity towork and your lifestyle?
(21:17):
So answer that question.
Number two what can youactually afford to purchase
comfortably?
Like, I'm not saying what canyou afford to stretch yourself
to the absolute limit, but whatcan you afford comfortably and
what are you happy to pay interms of mortgage repayments
down the track?
You've got to take into accounthere your insurance as well,
(21:39):
with your rates, maintenance,property management, taxes,
furnishings, et cetera.
The list goes on.
But what can you actuallyafford comfortably?
Number three how do propertymarkets behave in the areas of
your interest?
What are your historical growthrates?
Are you in Melbourne?
Are you in Sydney?
Are you in a regional town inWA?
Are you in a regional town inQueensland?
(21:59):
Where are you located?
What are the vacancy ratesthere?
What are the rental yields inthe investment region?
What about projectedinfrastructure, population
growth, internal migration?
You need to figure all that out.
Number four what is your risktolerance and capacity?
Can you handle vacancies ifanything happened?
(22:20):
Can you handle interest raterises?
Can you handle unexpectedmaintenance?
And do you have a savingsbuffer?
We've spoken about it manytimes Emergency funds are vital,
so do you have one?
And lastly, lifestylepreferences how important is
owning your own home against theflexibility of living where you
(22:42):
want to live and live the lifethat you want to live?
So that last question therewill probably answer the
question for you.
So should you rent vest or ownyour own home?
So here's my take Ifaffordability in your preferred
location is tight, rent vestingoffers a powerful strategy to
still build wealth withoutcompromising your lifestyle
(23:02):
completely.
It is the way to get intoproperty ownership while living
where you want, even if not inyour own investment.
And so many different peoplehave completely different
strategies with this.
But many people start with rentvesting and then transition to
owning in their preferredlocation later.
So if you can't afford whereyou want to buy, it's a great
(23:23):
idea to use rent vesting topropel you into your dream
location down the track.
But others own first and theninvest.
Sometimes it may take a bitlonger, but there's risks and
rewards of both.
But yeah, this is not financialadvice.
Do your own research.
But my take.
Everyone who knows me knows Ilove reinvesting.
You get to live where you wantto live.
(23:45):
You still invest at the sametime, so you still own property
and you're growing your capitalgrowth.
But there are some points tofigure out for yourself.
Everyone has different goals,different timelines, different
lifestyle preferences.
But I hope you have taken someinformation on board and,
ideally, know and if you'retrying to figure out what you're
(24:07):
wanting to do and how you'rewanting to approach your living
situation and do you buy a houseyou've been saving up for 10
years or do you buy aninvestment property.
I hope this episode has helpedyou figure out a bit more
clearly what you're wanting todo.
So until next time, ciao.
We hope you enjoyed the episode, as always.
You know exactly what to do.
Hit that follow button,subscribe, whatever platform you
(24:28):
listen to this podcast on, alsoshare it to friends, family,
co-workers, whoever you thinkmay benefit from it.
But unfortunately it's the endand we'll see you next week.
Would you rather rent a place you love in the city,
close to the cafes, beaches andnightlife, while secretly
building wealth in a suburbyou've never even visited?
Or would you rather stretchyourself to the limit, take on a
massive mortgage and finallyown a place you can truly call
yours, even if it means livingfurther out, cutting back on
lifestyle and watching interestrates like a hawk?
(00:21):
This is the choice so manyAussies are facing right now.
With house prices climbing,wages not keeping up and rents
hitting record highs, the bigquestion is should you rentvest
or should you own the home youlive in?
Welcome back to another episodeof the Finance Bible Podcast.
(00:50):
Zeke here and your co-host,oscar.
But before we get into it,please note that nothing in this
podcast should ever beconsidered as personal financial
advice.
Of course, if that is what youare seeking, reach out.
We'll get you in touch with thecorrect professionals.
Get the job done properly.
Sit back, relax and enjoy theshow.
Let's get into it.
(01:13):
Welcome back to another episodeof the Finance Bible Podcast.
Today you're with Oscar onceagain, and today's topic might
be one of the most importantdecisions for yourself that
you're trying to figure out.
Well, definitely, it's for manyAustralians, especially the
younger demographic.
And the topic is and thequestion is should you rent vest
(01:33):
or should you buy a home tolive in?
You've no doubt heard bothsides of the story.
You've probably got a friend's,cousin's brother who tells you
that you have to buy a house,you have to live in it, you've
got to get your own mortgage andpay that off.
And then you might have yourother friend's cousin's uncle
who talks about how good rentvesting is and tells you why you
(01:55):
need to get into rent vestingat a young age and how you can
get steps ahead.
So some people say owning ahome is the ultimate goal.
You've got your security, prideand building equity, which are
probably the main three.
But others argue that intoday's market rent vesting is
not just smart but it's actuallyessential because a lot has
(02:18):
changed since our parents werein their 20s, when buying a home
back then was the smartestdecision and the normal decision
.
But now, with house pricesrising, wages not keeping up,
everything's becoming soexpensive.
Do you look at rent vesting?
In this episode we'll walkthrough what rent vesting
(02:40):
actually is.
I'm sure you might've heard ofit it is a bit of a buzzword the
last two years but we'll talkabout what owning offers as well
.
The trade-offs are both therisks, real numbers and some
stories.
So some real client scenariosand ideally, by the end, my aim
is that you'll feel moreconfident about which path might
be right for you in terms ofwhich side of the fence do you
(03:03):
go.
Do you buy the house that youwant but you've got to
compromise on the locationbecause of your price?
Or do you rent vest and investin a high growth suburb,
interstate or locally, while yourent where you want to live?
So firstly, let's just definethe terms.
So when I talk about owning ahome, this means buying a
(03:23):
property that you live in, yourowner-occupier, your principal
place of residence.
You have a mortgage or you maypay it off in time, and you live
in that property and that isall it is.
The property is not paying youmoney, as in rental income,
because you're living in it.
You're paying your own mortgageoff.
The other term is rent vesting.
(03:44):
So this is a hybrid strategy.
This is where you rent whereyou want to live because maybe
it's too expensive to buy there.
Like, for example, let's say,you're in Melbourne and you want
to live and buy a property inArmidale, which is historically
a quite expensive suburb.
You may not afford to livethere or buy there.
Expensive suburb you may notafford to live there or buy
(04:07):
there.
So you rent a property inArmidale because you love the
area and you buy a $500,000property interstate which grows
at a good rate and pays you anincome, and then that gets you
one step ahead while you'restill renting and living in the
area that you like.
So yeah, rent vesting is whereyou rent where you want to live,
while you own an investmentproperty somewhere else, often
where prices are more affordableor growth is promising.
(04:28):
The main goal and idea of rentvesting is that your investment
property builds you equity andcapital growth, possibly
providing you rental income,ideally paying your mortgage for
you you can find in some areas,hence speak to professionals
like ourselves.
Also gives you tax benefitswhen you invest in property,
which is great, while you getthe lifestyle, flexibility and
(04:50):
where you want to live.
So it's owning plus rentingcombined in different locations.
Understanding the currenthousing statistics in Australia
does help us see why rentinvesting is growing in
conversation and becoming moreand more popular.
I've got a few differentstatistics here to talk about
just before we get into a bitmore detail, but over the past
(05:13):
25 years, australia's homeownership rate has fallen from
71% to 66%, showing that homeownership is declining, which it
makes sense, because the pricesof properties have been rising
drastically.
And then you've got the wageincreases and inflation.
It's not keeping up.
(05:34):
So individuals and the youngerindividuals are really
struggling to get into theirhomes, as in owner-occupier
homes and even investmentproperties, because even a
$500,000 property is still youneed at least 50 grand for a 10%
deposit.
So that's even a bit of moneyto save for.
Another statistic is rentvestings on the rise.
(05:56):
So, for instance, first homebuyer investors, people buying
their first home but not to livein it secured 8,300 loans in
2024, which was up 12% from theprevious year.
So those numbers are stillincreasing now as we're in 2025,
but even last year it wasalready 12% increased, which
(06:18):
shows that rent vesting you know, even 12 months ago is becoming
more and more popular.
Another statistic Westpac's homeownership report shows that in
New South Wales, 61% of peopleare considering rent vesting,
victoria 54% and Queensland 52%.
It's obvious why New SouthWales is 61% because Sydney is
(06:41):
so expensive, especially in theeastern suburbs and the beaches
up north, the northern beaches.
So everyone here is looking torent there.
So I, for example, I live inSydney, renting in Sydney, but
invest interstate.
I am one of those numbers.
So Victoria is the same.
(07:02):
Obviously, the last few yearsthe properties haven't been
rising as much as they used to,but it's still expensive.
So you've got nice areas orexpensive areas like South Yarra
, toorak, armadale, paran,richmond, all those areas around
there which are extremelyexpensive to buy in there.
So a lot of individuals andpeople I know are buying 30 to
(07:26):
60 minutes out of Melbournebecause they can't really afford
to buy in the areas that theywant to.
So this is just showing why 54%of people are saying I don't
want to do that.
I'd rather live where I want tolive and buy interstate and
Queensland as well 52%.
Queensland is rising inproperty prices as well.
Brisbane actually overtookMelbourne the other month in
(07:49):
terms of average property pricesin the country.
So at the moment, sydney,brisbane and Melbourne, which is
pretty interesting.
And then we've got one of thelast statistics here.
So your average weekly housingcosts interesting.
And then we've got one of thelast statistics here.
So your average weekly housingcosts in the last 12 months
owners with a mortgage.
So owner-occupier house paidaround $493 per week and renters
(08:09):
paid around $379 per week.
So if you're renting, you'resaving around $110 a week.
Just on these statistics.
But with saying that, itdepends if you are rent-vesting
is your investment property?
Is that paying for itself?
Are you putting a little bit ofmoney into that?
Are you putting a lot of moneyinto that?
So, pending how your investmentproperty is structured, with
(08:30):
the loan side of things and theactual property and the rental
yield, you may be better off oryou may actually be spending the
same as someone with anowner-occupied.
But with these statistics itjust shows you that generally,
renters are saving more moneyper week.
So we'll start with the pros ofowning a property, as in your
(08:50):
principal place of residence,because there's so many pros for
both sides, so manydisadvantages of both sides.
But the number one pros whicheveryone wants and this is why
everyone wants to buy a house,apart from the you know the
instagram photo of outside there, the property board with the
sold sticker is security andstability.
So owning a home that you livein gives you security of your
(09:16):
tenure.
So you don't have to rent.
You don't have to risk rentincreases to yourself or
eviction.
You have complete control overthe property.
You can have your own pet, youcan renovate as much as you want
, you can do any changes thatyou want, any landscaping the
list goes on.
You have full control of theproperty.
If you are in a strata complexor an apartment building, this
(09:38):
may be a little bit more limitedin terms of what you can and
you can't do, but most of thetime you have complete control
of what you want to do with theproperty.
Number two is it's for savingsand you're also building equity,
so every mortgage payment thatyou make is, technically
speaking, building ownership.
So it's separating the gap ofequity.
(10:00):
So over time, as you pay offyour principal, your wealth in
that asset increases.
So this just gives you extramoney, technically speaking, to
use to invest in anotherproperty or to buy another
property or to take the moneyout and put it towards something
else.
Number three this is anextremely common one.
Everyone becomes emotional andthey need the property for
(10:24):
psychological benefits as well.
When individuals look forproperties, many people feel a
sense of accomplishment,belonging and stability with a
certain home.
It's your home, it offerslifestyle certainty and it's
kind of a status symbol which alot of people strive towards, as
funny as that sounds.
Number four, in terms of proswhich we've come up with is the
(10:48):
potential for capital growth,which is why everyone goes into
property, because it's a greatasset to have in terms of growth
.
So if the area appreciates, youbenefit.
If you buy well over 10 to 20years, obviously the property
can deliver solid growth.
Property itself generallydoubles every 8 to 12 years.
So if you did hold it for over10 to 20 years, it probably
(11:12):
doubles twice, generallyspeaking.
On the other side of the fence,let's talk about some of the
cons of owning your own home.
So getting into the home.
Number one you've got your highupfront and ongoing costs.
You've got your deposit, whichis the hardest bit to actually
get From 1st of October.
You've got the 5% first homebuyer deposit scheme coming into
(11:33):
things, so that's actuallygoing to help a lot of people
with their initial deposit.
But you've got, apart from yourdeposit, you've got stamp duty.
You've got your property taxes,your maintenance rates,
insurance and your mortgagepayments.
Definitely within the firstfive years are extremely high
and, pending when you buy theproperty, the interest rates can
(11:54):
really make an impact on youroverall repayments.
You might want to fix them.
You might go variable butpending on what's happening in
the market.
This is where a mortgage brokercomes into play.
But this can vary your pendingon what's going on in the
economy at the time.
Another con is you got lessflexibility.
So In terms of your personallife, if you want to move jobs,
(12:17):
cities, anything, your lifestyleor your family, it can be a lot
harder because you have to sellyour property unless you rent
it out.
But most of the time peoplecan't afford to rent it out
because the rent won't cover theexpenses.
So it just makes a bit of aheadache in terms of what you
can do.
You might feel a little bitstuck if you're wanting to leave
(12:39):
and, for example, you mighthave lived in Melbourne for your
whole life and then you wake upone day and say I want to move
overseas.
Well, you've bought a house andif you did want to move
overseas, you most likely wouldlook at selling it.
Which you're selling can incurlots of costs and obviously
delays and when you want toleave.
So it just gives you a bit lessflexibility.
(13:01):
Number three lifestyle trade-off.
So to get into a good area, youmay need to compromise.
You might buy somewhere furtherout, you might buy a smaller
place, you might take on ahigher debt.
So you've got to figure thatout with yourself and what
you're open to compromise on.
Number four opportunity cost.
So money tied up in a principalresidence could be invested
elsewhere and depending whereyou bought.
(13:25):
Let's say, for example, thelast four years or so in
Melbourne has been prettyaverage in terms of property
growth.
If you bought a property forthe same price interstate in a
high growth suburb, you couldhave got a lot more back in
terms of your investment andbought multiple properties in
the same time because capitalgrowth you're purchasing a good
(13:46):
location.
So this just shows that it's anopportunity cost and you got
money tied up in an asset.
So if you're really certain andyou really want to live there,
do it.
But if you're more looking atbuilding wealth over time, there
could be other strategies foryou.
Also, your home doesn'tgenerate rental income or any
tax benefits in the same waythat investment property might,
(14:07):
which, if you do have a highincome, the tax benefits will
definitely help you with aninvestment property.
So they're the pros and cons ofa owner-occupier property.
So now let's go to the rentvesting side of things.
So obviously the number one profor rent vesting is your
lifestyle flexibility.
You can live where you want tolive.
(14:28):
Is it in a city?
Is it close to work?
Is it right next to the beach?
You might want to livesomewhere which has great
amenities, but without needingto buy there, which is the most
important thing.
You rent your preferredlocation but don't need the
price tag.
Number two and this is one ofthe reasons I am a rent investor
is you can look at strategicinvestment.
You can buy in areas wheregrowth is reasonable, prices are
(14:52):
low and affordable and therental yields great, and look
after itself, as in terms of themortgage, you let your
investment property do all theheavy lifting for you.
Number three potential taxadvantages, like I spoke about
before.
So with an investment property,obviously you get your rental
income.
You can also claim up to 40years of depreciation of your
(15:12):
investment property.
You can claim the interestallowable with deductions under
certain conditions with yourmortgage repayments, and these
can help offset costs as well.
So if you do have a higherincome, the tax advantages of a
investment property woulddefinitely help you with your
tax return and reducing your tax.
Number four building wealthwhile renting.
(15:34):
So if things go well and you'vebought in a good location and
you've done things in a goodmanner, the investment property
appreciates and generates income, giving dual benefits to
yourself lifestyle andaccumulation.
Now let's talk about some of thecons of rent vesting.
Number one you're still rentingyour own home so you don't get
(15:55):
the full emotional or securityupside of owning where you live.
You know you might cop a bit ofrent increases, possible
landlord issues, less controlover living environment.
This con, you know it can bebad for some people but if your
mindset's kind of like happy toyou know, rent somewhere while
you're building wealth, itdoesn't really matter.
(16:16):
But I know some people get abit funny with renting and they
say rent money is dead money,which I don't necessarily
believe in.
But that's just one of the cons.
Number two you've gotmanagement complexity, so being
a landlord involves moreresponsibilities.
You've got to find tenants,you've got maintenance,
vacancies, dealing with tenantsand if things go wrong it can
(16:38):
cost time and money.
So a way to avoid this anywayis looking at getting a property
manager.
One of the big mistakes manyrent investors find is they want
to look at managing theproperty themselves, which, if
it's interstate.
Good luck trying to manage yourown investment property because
, firstly, you may not know themarket, you don't know the
(16:58):
average rental yield in thatarea, you don't know really how
to get things set up.
So finding a property managerif it is an interstate property,
it's just essential.
Number three costs and risks.
So you may have extra costs.
So travel, if you visit yourinvestment property.
You've got property managementfees, you got vacancy periods
(17:19):
and look, investment propertyyields might not always be great
.
So this comes back to yourresearch and your due diligence
before you invest in theproperty.
So make sure that you've doneall this and you've checked all
these out, because if you can'tafford ongoing property
management fees or your propertybecomes vacant for six months
by chance and something rarehappens, you need to make sure
that you can afford the mortgagerepayments in that time.
(17:42):
Because if you can't, well,that's when trouble starts to
happen and you may end up havingto sell the property and pay
some fines.
So that's where you need to doyour research and actually
crunch the numbers first beforeyou dive into it.
Because when you sayreinvesting, it's not all
sunshine and rainbows.
There are some horror stories.
So you really need to just becareful and know what you're
(18:03):
doing.
Number four this is quiteimportant is financial
discipline is needed.
So you need to manage bothcosts of your own rent plus your
cost of your investmentmortgage or a portion of.
Let's say, you only put in 50bucks a week because your
investment property pays theother $350, or, let's say,
(18:23):
you've got to pay the wholething.
So you need to look at managingthe whole thing.
Also, manage your expenses andmake sure your cashflow works.
So this just requires goodplanning and risk management
which, like I said just before,before you get into an
investment property, youdefinitely do need to look at
all this.
So the next part of this is Iwant to share an example a real
(18:44):
example, actually, just one ofthem that came across a couple
of years back for a couple ofclients who actually approached
us.
So I'm not going to use theirreal name, but we had a client,
let's say, emma in, in her late20s.
She works in Sydney, cbd.
Her main dream was living closeto work, cafes, the beach,
(19:05):
having a great lifestyle.
She realized that buying inSydney near the city was
extremely expensive.
So, first of all, you need anextremely high deposit amount
and then, even if you get thedeposit amount.
You then got the big mortgagerepayments ongoing for at least
30 years.
So that was the first issuethat she ran into.
(19:26):
She had two options.
Option A was buy in the outersuburbs far from work.
So if she did this you'd haveto increase her commute time to
work.
Lifestyle would compromise, shewouldn't be near the beach.
She wouldn't be near the beach,she wouldn't be near the cafes
and it just wouldn't reallyalign with what she wanted.
The second option, option B,would be rent near her ideal
(19:47):
location.
So you're talking about anapartment in the inner city and
look at buying an investmentproperty in a growth region, say
in Queensland, perth at thetime, wherever it may be, or an
affordable town with good growthpotential.
Here she rents for $600 a weekin the inner city of Sydney and
(20:09):
she buys an investment propertyfor around $600,000 in a high
growth suburb with a rentalincome of around 5%.
So over 10 years thatinvestment property might grow.
Her renters pay down part ofher mortgage and meanwhile her
lived in residence gives herwhat she wants in terms of daily
living.
So in 20 years she'll be ableto look at utilizing the
(20:31):
substantial amount of equityalong the way to use that
deposit for more properties orfinally get the house that she
wanted to in Sydney.
So this just shows that rentvesting allows you to do what
you're wanting to do withoutcompromising your lifestyle.
Now, before we wrap up, thereare a set of questions and a bit
(20:53):
of a checklist like I did thelast episode that you can use if
you're trying to decide whetherrent, investing or owning your
own property makes more sensefor you.
So there's five questions I'vecome up with.
Number one what are yourlong-term goals?
Do you plan to stay in oneplace?
Do you see yourself movingcities, moving jobs?
How important is proximity towork and your lifestyle?
(21:17):
So answer that question.
Number two what can youactually afford to purchase
comfortably?
Like, I'm not saying what canyou afford to stretch yourself
to the absolute limit, but whatcan you afford comfortably and
what are you happy to pay interms of mortgage repayments
down the track?
You've got to take into accounthere your insurance as well,
(21:39):
with your rates, maintenance,property management, taxes,
furnishings, et cetera.
The list goes on.
But what can you actuallyafford comfortably?
Number three how do propertymarkets behave in the areas of
your interest?
What are your historical growthrates?
Are you in Melbourne?
Are you in Sydney?
Are you in a regional town inWA?
Are you in a regional town inQueensland?
(21:59):
Where are you located?
What are the vacancy ratesthere?
What are the rental yields inthe investment region?
What about projectedinfrastructure, population
growth, internal migration?
You need to figure all that out.
Number four what is your risktolerance and capacity?
Can you handle vacancies ifanything happened?
(22:20):
Can you handle interest raterises?
Can you handle unexpectedmaintenance?
And do you have a savingsbuffer?
We've spoken about it manytimes Emergency funds are vital,
so do you have one?
And lastly, lifestylepreferences how important is
owning your own home against theflexibility of living where you
(22:42):
want to live and live the lifethat you want to live?
So that last question therewill probably answer the
question for you.
So should you rent vest or ownyour own home?
So here's my take Ifaffordability in your preferred
location is tight, rent vestingoffers a powerful strategy to
still build wealth withoutcompromising your lifestyle
(23:02):
completely.
It is the way to get intoproperty ownership while living
where you want, even if not inyour own investment.
And so many different peoplehave completely different
strategies with this.
But many people start with rentvesting and then transition to
owning in their preferredlocation later.
So if you can't afford whereyou want to buy, it's a great
(23:23):
idea to use rent vesting topropel you into your dream
location down the track.
But others own first and theninvest.
Sometimes it may take a bitlonger, but there's risks and
rewards of both.
But yeah, this is not financialadvice.
Do your own research.
But my take.
Everyone who knows me knows Ilove reinvesting.
You get to live where you wantto live.
(23:45):
You still invest at the sametime, so you still own property
and you're growing your capitalgrowth.
But there are some points tofigure out for yourself.
Everyone has different goals,different timelines, different
lifestyle preferences.
But I hope you have taken someinformation on board and,
ideally, know and if you'retrying to figure out what you're
(24:07):
wanting to do and how you'rewanting to approach your living
situation and do you buy a houseyou've been saving up for 10
years or do you buy aninvestment property.
I hope this episode has helpedyou figure out a bit more
clearly what you're wanting todo.
So until next time, ciao.
We hope you enjoyed the episode, as always.
You know exactly what to do.
Hit that follow button,subscribe, whatever platform you
(24:28):
listen to this podcast on, alsoshare it to friends, family,
co-workers, whoever you thinkmay benefit from it.
But unfortunately it's the endand we'll see you next week.
Popular Podcasts
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.