For generations, owning a home has been seen as the ultimate sign of financial success in Australia. But with property prices rising faster than wages in many capital cities, more Australians are exploring alternatives. One strategy that has gained momentum is rentvesting - renting the home you live in while investing in property elsewhere.

Both approaches can build wealth, but they create very different experiences along the way. The real question isn’t which strategy is “better” overall, but which one positions you for the lifestyle and financial outcomes you want in the future.

Home Ownership - Security first

Buying your own home is about more than just numbers. It represents stability, certainty, and the chance to put down roots. For many people, that sense of security is priceless. You know you won’t be asked to leave by a landlord, and each repayment brings you closer to owning your home outright.

The long-term advantage of home ownership is clear: once the loan is paid off, your living costs drop significantly, giving you more freedom in retirement. On top of that, your principal residence benefits from tax-free capital growth — one of the few exemptions in Australia’s tax system.

But home ownership comes with trade-offs. A principal place of residence (PPOR) is funded entirely with after-tax income, generates no rental return, and doesn’t support your borrowing power in the short term.

This is where many investors hit a ceiling. Stretching to buy a $950k+ home may provide lifestyle security, but it also locks up borrowing power in a non-deductible mortgage. Instead of building a portfolio, you’re left servicing debt that limits your capacity to invest further.

That doesn’t mean home ownership isn’t valuable. For many, it’s still the long-term goal. But timing matters. Buying too soon can delay the portfolio growth that ultimately gives you the financial foundation to secure that dream home without compromise.

Rentvesting - Flexibility

Rentvesting gives investors access to high-performing markets they may not be able to live in themselves. For example, a $700k home in Sydney’s inner west may be out of reach as a Principal place of residence, but the same investor could purchase a $550k property in a growth corridor of Brisbane or Adelaide — an area with strong rental demand and capital growth potential.

This approach keeps lifestyle flexible while putting capital to work in an investment-grade property. Rentvesting also provides:

• Rental income to offset holding costs.

• Tax deductions on loan interest and expenses.

• Access to stronger yields in affordable growth markets outside expensive metro hubs.

Numbers in Action

Let’s take a 30-year-old professional earning $120,000 per year with $120,000 in savings. 

Scenario 1: Buying a Home

• PPOR in Sydney’s west: $900,000

• Deposit: $120,000 (13%)

• Loan: $780,000 (P&I, 5.75%)

• Monthly Repayments: $4,800

• Cashflow: Entirely out of pocket (no rental income, no tax benefits)

Scenario 2: Rentvesting

• Investment Property: $600,000 in Adelaide growth corridor

• Deposit: $120,000 (20%)

• Loan: $480,000 (interest-only, 6.25%)

• Rent Received: $580 per week (5% yield) = $30,000 annually

• Rent Paid for Lifestyle Home: $650 per week = $33,800 annually

• Cashflow: $3,800 per year before tax offsets, but with interest deductions easing the burden

30-Year Projection

• Home Ownership: Mortgage-free PPOR worth $5.3m (assuming 6% growth), but no investment portfolio.

• Rentvesting: Portfolio of two to three properties in the $450k–$900k range, generating both growth and income, while retaining lifestyle flexibility.

The Key Takeaway:

• Buying a PPOR early provides stability but can cap your wealth-building potential by locking up borrowing power in a non-deductible mortgage.

• Rentvesting may involve some short-term cash flow sacrifice, but it can build a stronger financial base over time through multiple investment properties.

• For investors, the rentvesting pathway often creates momentum because each purchase supports the next, rather than slowing progress.

Beyond Today's Choice

When comparing home ownership and rentvesting, the key isn’t to ask which is universally “better.” The key is to ask:

• Which strategy aligns with my goals?

• How does this decision shape my ability to invest again in the future?

• What trade-offs am I willing to make between lifestyle, security, and long-term wealth?