OD#12 - Owning vs Rentvesting: Which One Will Actually Make You Wealthy?

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?

Chapters

• 0:00 The Australian Housing Dilemma
• 3:31 Understanding Rentvesting vs. Home Ownership
• 6:07 Current Housing Statistics in Australia
• 8:56 Pros and Cons of Home Ownership
• 14:21 Benefits and Challenges of Rentvesting
• 18:51 Real-Life Rentvesting Example
• 21:01 Decision-Making Checklist
• 24:12 Final Thoughts and Conclusion

Transcript

Speaker 1: 0:00

Would you rather rent a place you love in the city, close to the cafes, beaches and nightlife, while secretly building wealth in a suburb you've never even visited? Or would you rather stretch yourself to the limit, take on a massive mortgage and finally own a place you can truly call yours, even if it means living further out, cutting back on lifestyle and watching interest rates like a hawk? This is the choice so many Aussies are facing right now. With house prices climbing, wages not keeping up and rents hitting record highs, the big question is should you rentvest or should you own the home you live in? Welcome back to another episode of the Finance Bible Podcast. Zeke here and your co-host, oscar. But before we get into it, please note that nothing in this podcast should ever be considered as personal financial advice. Of course, if that is what you are seeking, reach out. We'll get you in touch with the correct professionals. Get the job done properly. Sit back, relax and enjoy the show. Let's get into it.

Speaker 1: 1:13

Welcome back to another episode of the Finance Bible Podcast. Today you're with Oscar once again, and today's topic might be one of the most important decisions for yourself that you're trying to figure out. Well, definitely, it's for many Australians, especially the younger demographic. And the topic is and the question is should you rent vest or should you buy a home to live in? You've no doubt heard both sides 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 and pay that off. And then you might have your other friend's cousin's uncle who talks about how good rent vesting is and tells you why you need to get into rent vesting at a young age and how you can get steps ahead. So some people say owning a home is the ultimate goal. You've got your security, pride and building equity, which are probably the main three. But others argue that in today's market rent vesting is not just smart but it's actually essential because a lot has changed since our parents were in their 20s, when buying a home back then was the smartest decision and the normal decision. But now, with house prices rising, wages not keeping up, everything's becoming so expensive.

Speaker 1: 2:35

Do you look at rent vesting? In this episode we'll walk through what rent vesting actually is. I'm sure you might've heard of it it is a bit of a buzzword the last two years but we'll talk about what owning offers as well. The trade-offs are both the risks, real numbers and some stories. So some real client scenarios and ideally, by the end, my aim is that you'll feel more confident about which path might be right for you in terms of which side of the fence do you go.

Speaker 1: 3:04

Do you buy the house that you want but you've got to compromise on the location because of your price? Or do you rent vest and invest in a high growth suburb, interstate or locally, while you rent where you want to live? So firstly, let's just define the terms. So when I talk about owning a home, this means buying a property that you live in, your owner-occupier, your principal place of residence. You have a mortgage or you may pay it off in time, and you live in that property and that is all it is. The property is not paying you money, as in rental income, because you're living in it. You're paying your own mortgage off.

Speaker 1: 3:42

The other term is rent vesting. So this is a hybrid strategy. This is where you rent where you 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 in Armidale, which is historically a quite expensive suburb. You may not afford to live there or buy there. Expensive suburb you may not afford to live there or buy there. So you rent a property in Armidale because you love the area and you buy a $500,000 property interstate which grows at a good rate and pays you an income, and then that gets you one step ahead while you're still renting and living in the area that you like. So yeah, rent vesting is where you rent where you want to live, while you own an investment property somewhere else, often where prices are more affordable or growth is promising. The main goal and idea of rent vesting is that your investment property builds you equity and capital 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 benefits when you invest in property, which is great, while you get the lifestyle, flexibility and where you want to live. So it's owning plus renting combined in different locations.

Speaker 1: 4:55

Understanding the current housing statistics in Australia does help us see why rent investing is growing in conversation and becoming more and more popular. I've got a few different statistics here to talk about just before we get into a bit more detail, but over the past 25 years, australia's home ownership rate has fallen from 71% to 66%, showing that home ownership is declining, which it makes sense, because the prices of properties have been rising drastically. And then you've got the wage increases and inflation. It's not keeping up. So individuals and the younger individuals are really struggling to get into their homes, as in owner-occupier homes and even investment properties, because even a $500,000 property is still you need at least 50 grand for a 10% deposit. So that's even a bit of money to save for. Another statistic is rent vestings on the rise. So, for instance, first home buyer investors, people buying their first home but not to live in it secured 8,300 loans in 2024, which was up 12% from the previous year. So those numbers are still increasing now as we're in 2025, but even last year it was already 12% increased, which shows that rent vesting you know, even 12 months ago is becoming more and more popular.

Speaker 1: 6:23

Another statistic Westpac's home ownership report shows that in New South Wales, 61% of people are considering rent vesting, victoria 54% and Queensland 52%. It's obvious why New South Wales is 61% because Sydney is so expensive, especially in the eastern suburbs and the beaches up north, the northern beaches. So everyone here is looking to rent there. So I, for example, I live in Sydney, renting in Sydney, but invest interstate. I am one of those numbers. So Victoria is the same.

Speaker 1: 7:02

Obviously, the last few years the properties haven't been rising as much as they used to, but it's still expensive. So you've got nice areas or expensive areas like South Yarra, toorak, armadale, paran, richmond, all those areas around there which are extremely expensive to buy in there. So a lot of individuals and people I know are buying 30 to 60 minutes out of Melbourne because they can't really afford to buy in the areas that they want 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 to live and buy interstate and Queensland as well 52%. Queensland is rising in property prices as well. Brisbane actually overtook Melbourne the other month in terms of average property prices in the country. So at the moment, sydney, brisbane and Melbourne, which is pretty interesting.

Speaker 1: 7:57

And then we've got one of the last statistics here. So your average weekly housing costs interesting. And then we've got one of the last statistics here. So your average weekly housing costs in the last 12 months owners with a mortgage. So owner-occupier house paid around $493 per week and renters paid around $379 per week. So if you're renting, you're saving around $110 a week. Just on these statistics. But with saying that, it depends if you are rent-vesting is your investment property? Is that paying for itself? Are you putting a little bit of money into that? Are you putting a lot of money into that? So, pending how your investment property is structured, with the loan side of things and the actual property and the rental yield, you may be better off or you may actually be spending the same as someone with an owner-occupied. But with these statistics it just shows you that generally, renters are saving more money per week.

Speaker 1: 8:46

So we'll start with the pros of owning a property, as in your principal place of residence, because there's so many pros for both sides, so many disadvantages of both sides. But the number one pros which everyone 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 and stability. So owning a home that you live in gives you security of your tenure. So you don't have to rent. You don't have to risk rent increases to yourself or eviction. You have complete control over the property. You can have your own pet, you can renovate as much as you want, you can do any changes that you want, any landscaping the list goes on. You have full control of the property. If you are in a strata complex or an apartment building, this may be a little bit more limited in terms of what you can and you can't do, but most of the time you have complete control of what you want to do with the property.

Speaker 1: 9:49

Number two is it's for savings and you're also building equity, so every mortgage payment that you make is, technically speaking, building ownership. So it's separating the gap of equity. So over time, as you pay off your principal, your wealth in that asset increases. So this just gives you extra money, technically speaking, to use to invest in another property or to buy another property or to take the money out and put it towards something else. Number three this is an extremely common one. Everyone becomes emotional and they need the property for psychological benefits as well.

Speaker 1: 10:27

When individuals look for properties, many people feel a sense of accomplishment, belonging and stability with a certain home. It's your home, it offers lifestyle certainty and it's kind of a status symbol which a lot of people strive towards, as funny as that sounds. Number four, in terms of pros which we've come up with is the potential for capital growth, which is why everyone goes into property, because it's a great asset to have in terms of growth. So if the area appreciates, you benefit. If you buy well over 10 to 20 years, obviously the property can deliver solid growth. Property itself generally doubles every 8 to 12 years. So if you did hold it for over 10 to 20 years, it probably doubles twice, generally speaking.

Speaker 1: 11:15

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 high upfront and ongoing costs. You've got your deposit, which is the hardest bit to actually get From 1st of October. You've got the 5% first home buyer deposit scheme coming into things, so that's actually going to help a lot of people with their initial deposit. But you've got, apart from your deposit, you've got stamp duty. You've got your property taxes, your maintenance rates, insurance and your mortgage payments. Definitely within the first five years are extremely high and, pending when you buy the property, the interest rates can really make an impact on your overall repayments. You might want to fix them. You might go variable but pending on what's happening in the market. This is where a mortgage broker comes into play. But this can vary your pending on what's going on in the economy at the time.

Speaker 1: 12:09

Another con is you got less flexibility. So In terms of your personal life, if you want to move jobs, cities, anything, your lifestyle or your family, it can be a lot harder because you have to sell your property unless you rent it out. But most of the time people can't afford to rent it out because the rent won't cover the expenses. So it just makes a bit of a headache in terms of what you can do. You might feel a little bit stuck if you're wanting to leave and, for example, you might have lived in Melbourne for your whole life and then you wake up one day and say I want to move overseas. Well, you've bought a house and if you did want to move overseas, you most likely would look at selling it. Which you're selling can incur lots of costs and obviously delays and when you want to leave. So it just gives you a bit less flexibility.

Speaker 1: 13:01

Number three lifestyle trade-off. So to get into a good area, you may need to compromise. You might buy somewhere further out, you might buy a smaller place, you might take on a higher debt. So you've got to figure that out with yourself and what you're open to compromise on. Number four opportunity cost. So money tied up in a principal residence could be invested elsewhere and depending where you bought. Let's say, for example, the last four years or so in Melbourne has been pretty average in terms of property growth. If you bought a property for the same price interstate in a high growth suburb, you could have got a lot more back in terms of your investment and bought multiple properties in the same time because capital growth you're purchasing a good location. So this just shows that it's an opportunity cost and you got money tied up in an asset. So if you're really certain and you really want to live there, do it. But if you're more looking at building wealth over time, there could be other strategies for you. Also, your home doesn't generate rental income or any tax benefits in the same way that investment property might, which, if you do have a high income, the tax benefits will definitely help you with an investment property. So they're the pros and cons of a owner-occupier property.

Speaker 1: 14:18

So now let's go to the rent vesting side of things. So obviously the number one pro for rent vesting is your lifestyle flexibility. You can live where you want to live. Is it in a city? Is it close to work? Is it right next to the beach? You might want to live somewhere which has great amenities, but without needing to buy there, which is the most important thing. You rent your preferred location but don't need the price tag. Number two and this is one of the reasons I am a rent investor is you can look at strategic investment. You can buy in areas where growth is reasonable, prices are low and affordable and the rental yields great, and look after itself, as in terms of the mortgage, you let your investment property do all the heavy lifting for you.

Speaker 1: 15:02

Number three potential tax advantages, like I spoke about before. So with an investment property, obviously you get your rental income. You can also claim up to 40 years of depreciation of your investment property. You can claim the interest allowable with deductions under certain conditions with your mortgage repayments, and these can help offset costs as well. So if you do have a higher income, the tax advantages of a investment property would definitely help you with your tax return and reducing your tax. Number four building wealth while renting. So if things go well and you've bought in a good location and you've done things in a good manner, the investment property appreciates and generates income, giving dual benefits to yourself lifestyle and accumulation.

Speaker 1: 15:49

Now let's talk about some of the cons of rent vesting. Number one you're still renting your own home so you don't get the full emotional or security upside of owning where you live. You know you might cop a bit of rent increases, possible landlord issues, less control over living environment. This con, you know it can be bad for some people but if your mindset's kind of like happy to you know, rent somewhere while you're building wealth, it doesn't really matter. But I know some people get a bit 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 got management complexity, so being a landlord involves more responsibilities. You've got to find tenants, you've got maintenance, vacancies, dealing with tenants and if things go wrong it can cost time and money. So a way to avoid this anyway is looking at getting a property manager. One of the big mistakes many rent investors find is they want to look at managing the property themselves, which, if it's interstate. Good luck trying to manage your own investment property because, firstly, you may not know the market, you don't know the average rental yield in that area, you don't know really how to get things set up. So finding a property manager if it is an interstate property, it's just essential.

Speaker 1: 17:09

Number three costs and risks. So you may have extra costs. So travel, if you visit your investment property. You've got property management fees, you got vacancy periods and look, investment property yields might not always be great. So this comes back to your research and your due diligence before you invest in the property. So make sure that you've done all this and you've checked all these out, because if you can't afford ongoing property management fees or your property becomes vacant for six months by chance and something rare happens, you need to make sure that you can afford the mortgage repayments in that time. Because if you can't, well, that's when trouble starts to happen and you may end up having to sell the property and pay some fines. So that's where you need to do your research and actually crunch the numbers first before you dive into it. Because when you say reinvesting, it's not all sunshine and rainbows. There are some horror stories. So you really need to just be careful and know what you're doing.

Speaker 1: 18:04

Number four this is quite important is financial discipline is needed. So you need to manage both costs of your own rent plus your cost of your investment mortgage or a portion of. Let's say, you only put in 50 bucks a week because your investment property pays the other $350, or, let's say, you've got to pay the whole thing. So you need to look at managing the whole thing. Also, manage your expenses and make sure your cashflow works. So this just requires good planning and risk management which, like I said just before, before you get into an investment property, you definitely do need to look at all this.

Speaker 1: 18:39

So the next part of this is I want to share an example a real example, actually, just one of them that came across a couple of years back for a couple of clients who actually approached us. So I'm not going to use their real name, but we had a client, let's say, emma in, in her late 20s. She works in Sydney, cbd. Her main dream was living close to work, cafes, the beach, having a great lifestyle. She realized that buying in Sydney near the city was extremely expensive. So, first of all, you need an extremely high deposit amount and then, even if you get the deposit amount. You then got the big mortgage repayments ongoing for at least 30 years. So that was the first issue that she ran into. She had two options. Option A was buy in the outer suburbs far from work. So if she did this you'd have to increase her commute time to work. Lifestyle would compromise, she wouldn't be near the beach. She wouldn't be near the beach, she wouldn't be near the cafes and it just wouldn't really align with what she wanted. The second option, option B, would be rent near her ideal location. So you're talking about an apartment in the inner city and look at buying an investment property in a growth region, say in Queensland, perth at the time, wherever it may be, or an affordable town with good growth potential. Here she rents for $600 a week in the inner city of Sydney and she buys an investment property for around $600,000 in a high growth suburb with a rental income of around 5%. So over 10 years that investment property might grow. Her renters pay down part of her mortgage and meanwhile her lived in residence gives her what she wants in terms of daily living. So in 20 years she'll be able to look at utilizing the substantial amount of equity along the way to use that deposit for more properties or finally get the house that she wanted to in Sydney. So this just shows that rent vesting allows you to do what you're wanting to do without compromising your lifestyle.

Speaker 1: 20:48

Now, before we wrap up, there are a set of questions and a bit of a checklist like I did the last episode that you can use if you're trying to decide whether rent, investing or owning your own property makes more sense for you. So there's five questions I've come up with. Number one what are your long-term goals? Do you plan to stay in one place? Do you see yourself moving cities, moving jobs? How important is proximity to work and your lifestyle? So answer that question. Number two what can you actually afford to purchase comfortably? Like, I'm not saying what can you afford to stretch yourself to the absolute limit, but what can you afford comfortably and what are you happy to pay in terms of mortgage repayments down the track? You've got to take into account here your insurance as well, with your rates, maintenance, property management, taxes, furnishings, et cetera. The list goes on. But what can you actually afford comfortably?

Speaker 1: 21:46

Number three how do property markets behave in the areas of your interest? What are your historical growth rates? Are you in Melbourne? Are you in Sydney? Are you in a regional town in WA? Are you in a regional town in Queensland? Where are you located? What are the vacancy rates there? What are the rental yields in the investment region? What about projected infrastructure, population growth, internal migration? You need to figure all that out.

Speaker 1: 22:13

Number four what is your risk tolerance and capacity? Can you handle vacancies if anything happened? Can you handle interest rate rises? Can you handle unexpected maintenance? And do you have a savings buffer? We've spoken about it many times Emergency funds are vital, so do you have one?

Speaker 1: 22:32

And lastly, lifestyle preferences how important is owning your own home against the flexibility of living where you want to live and live the life that you want to live? So that last question there will probably answer the question for you. So should you rent vest or own your own home? So here's my take If affordability in your preferred location is tight, rent vesting offers a powerful strategy to still build wealth without compromising your lifestyle completely. It is the way to get into property ownership while living where you want, even if not in your own investment. And so many different people have completely different strategies with this. But many people start with rent vesting and then transition to owning in their preferred location later. So if you can't afford where you want to buy, it's a great idea to use rent vesting to propel you into your dream location down the track. But others own first and then invest. Sometimes it may take a bit longer, but there's risks and rewards of both. But yeah, this is not financial advice. Do your own research. But my take.

Speaker 1: 23:41

Everyone who knows me knows I love reinvesting. You get to live where you want to live. You still invest at the same time, so you still own property and you're growing your capital growth. But there are some points to figure out for yourself. Everyone has different goals, different timelines, different lifestyle preferences. But I hope you have taken some information on board and, ideally, know and if you're trying to figure out what you're wanting to do and how you're wanting to approach your living situation and do you buy a house you've been saving up for 10 years or do you buy an investment property. I hope this episode has helped you figure out a bit more clearly what you're wanting to do. 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 listen to this podcast on, also share it to friends, family, co-workers, whoever you think may benefit from it. But unfortunately it's the end and we'll see you next week.