Rentvesting vs Owner Occupied for First Home Buyers: What’s Right for You?

As a first home buyer in Australia, you’re probably juggling big dreams with bigger decisions. Among the most significant of these is choosing between buying a home to live in (owner-occupied) or adopting a strategy known as rentvesting—buying an investment property while continuing to rent elsewhere.

At IFC, we guide first-time buyers through these complex decisions with tailored financial advice, mortgage lending services, and holistic accounting strategies. In this article, we’ll explore the pros, cons, and key considerations of rentvesting vs owner occupation, so you can make a well-informed decisions aligned with your financial goals.

What is Rentvesting?

Rentvesting is a strategy where you purchase an investment property in a more affordable or higher-growth area, while continuing to rent in a location that suits your lifestyle.

For example, a first home buyer might buy an investment property in regional Queensland or Western Sydney, where the entry cost is lower or growth potential is higher, while continuing to rent in an inner Melbourne or Sydney suburb close to work and social life.

This strategy has gained popularity among younger Australians, especially in major cities where property prices often outpace wage growth.

What is an Owner-Occupied Property?

An owner-occupied property is your primary place of residence. When you buy a home with the intention of living in it, this property becomes owner-occupied.

This is the traditional route many Australians take. It offers emotional satisfaction, a sense of stability, and the benefit of building equity in your own home. Plus, there are a range of government grants and concessions available specifically to first-time owner-occupiers.

Rentvesting vs Owner Occupied: Key Differences

Rentvesting: Advantages and Considerations

Pros of Rentvesting

1. Enter the Market Sooner
   With property prices in inner-city suburbs reaching unattainable levels for many first home buyers, rentvesting offers a way to enter the market with a smaller deposit by targeting affordable growth areas.

2. Tax Advantages
   Investment properties in Australia come with significant tax benefits. Expenses such as interest on the loan, property management fees, repairs, and depreciation can be claimed as tax deductions. Note: Always consult a registered tax agent or financial adviser.

3. Greater Lifestyle Flexibility
   Live in the city, near the beach, or close to work while your investment property works for you elsewhere. You’re not tied down by your mortgage to one location.

4. Potential for Capital Growth
   By choosing high-growth suburbs, you may build equity faster than in an owner-occupied home in a more expensive but slower-growth area.

Cons of Rentvesting

• No Access to Certain Grants
  Government schemes like the First Home Owner Grant (FHOG) and stamp duty exemptions are usually restricted to buyers who live in the property as their primary residence.

• Rental Instability
  Renting means subjecting yourself to potential rent increases or needing to move if the landlord sells the property.

• Potential for Vacancy
  If your investment property sits vacant, you’ll need to cover mortgage repayments out of pocket, which may strain your cash flow.

• Emotional Detachment
  You may not feel the same connection to an investment property as you would to a home you live in.

Owner-Occupying: Advantages and Considerations

Pros of Owner Occupation

1. Access to First Home Buyer Incentives
   First home buyers in Australia may be eligible for the First Home Guarantee, FHOG, and stamp duty concessions, especially if buying new or off-the-plan properties. These can significantly reduce upfront costs.

2. Stability and Security
   Living in your own home provides peace of mind—you won’t be asked to move or face sudden rent hikes.

3. Potential Capital Gains Tax (CGT) Exemption
   Owner-occupied homes are typically exempt from CGT when you sell, unlike investment properties.

4. Lower Interest Rates
   Loans for owner-occupied properties generally have lower interest rates than investment loans.

Cons of Owner Occupation

• Larger Upfront Costs
  Buying in a desirable area may require a bigger deposit and higher loan repayments, especially in cities like Sydney and Melbourne.

• Reduced Tax Benefits
  You cannot claim tax deductions for your own mortgage interest or home-related expenses.

• Location Compromise
  You may need to buy further from your ideal location in order to afford an owner-occupied home.

Case Study: Sarah and Tom, First-Time Buyers in Sydney

Meet Sarah and Tom, both in their early 30s, wanted to buy their first home. Their goal was to eventually live near the Brisbane CBD, but the prices were out of reach.

After weighing up their options, they chose a rentvesting strategy—buying a positively geared property in Toowoomba while continuing to rent in Brisbane’s Inner West.

With careful financial planning, they:

• Claimed tax deductions for their investment property.

• Maintained lifestyle flexibility close to work and social life.

• Built equity, which they plan to use as a deposit for a future home purchase.

This hybrid approach allowed them to work toward their long-term goal while investing smartly.

How Infinity Financial Consultants Can Help

At Infinity Financial Consultants, we offer a multi-disciplinary approach to help you make confident, informed decisions whether you’re leaning toward rentvesting or home ownership. Our services include:

Financial Planning

We analyse your cash flow, goals, and risk appetite to recommend a suitable investment strategies.

Mortgage Lending

As mortgage brokers, we compare hundreds of loan products to find competitive rates and loan features tailored to your strategy.

Accounting & Tax

Our accountants ensure you’re structured correctly to maximise tax benefits and meet your ATO obligations.

Key Questions to Ask Before Deciding

1. What are your short- and long-term goals?

2. Are you prioritising lifestyle or investment returns?

3. How secure is your current income?

4. Are you eligible for government incentives as a first home buyer?

5. Do you understand the tax implications of each option?

6. Would you be comfortable managing a rental property?

We recommend speaking with a qualified financial adviser before making any decisions. 

So, Which Option is Right for You?

There’s no one-size-fits-all answer to the rentvesting vs owner-occupied debate. It all depends on your financial situation, goals, risk tolerance, and lifestyle preferences.

Rentvesting can be a smart strategy if you’re looking to break into the market while maintaining lifestyle flexibility and maximising tax benefits.

Owner occupation is ideal for those seeking stability, emotional satisfaction, and access to first home buyer grants and incentives.

Whichever path you choose, the IFC team is here to help you navigate the complexities with clear, and tailored advice.

Ready to Take the Next Step?

Book a free initial consultation with the team at Infinity Financial Consultants to explore your options and create a personalised strategy to secure your financial future.

Call us today or Contact Us. 

Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Opinions constitute our judgement at the time of issue and are subject to change. Neither, the licensee or any of the Infinity group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document. Before making a decision to acquire a financial product, you should obtain and read the product disclosure statement (pds) relating to that product. Past performance is not a reliable guide to future returns. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue.