This snippet is from one of our previous episodes: Picking One Over The Other: Top Tips To Help Property Investors Make The Best Judgement Call. 

You’ve saved your deposit, you’re ready to step onto the property ladder… but here comes the big question: should you buy your own home or rentvest? 

It’s a debate many first-time buyers face, and in this TPC Gold bonus episode, Ben and Bryce unpack the pros and cons of both strategies so you can make a decision that suits your finances and your lifestyle. 

In this episode, you’ll learn: 

  • Why rentvesting can deliver strong financial returns (if you commit to it long-term) 
  • The hidden emotional and lifestyle factors most people forget to consider 
  • How owning your own home can still be a powerful wealth-building tool 
  • Common traps new investors fall into when switching between strategies 
  • Why your personal goals should drive the decision more than any spreadsheet 

If you’re a first-time buyer debating your next move, this episode will give you clarity on the rentvesting vs. buying debate. 

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No matter which path you choose, it’s important to know the market before you make your move.  

That’s where our Property Report can help. It’s a 39-page data-packed guide on the suburb you’re considering, including: 

✅ Suburb insights & demographics
✅ 20 key market stats including long-term growth & market cycle timing
✅ Strengths & weaknesses spotlight for your chosen suburb
✅ Clear, easy-to-read graphs and explanations 

Claim your Property Report today (FREE!) and start making confident, data-backed decisions. 

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Transcript

Mark 
The thing that I’d like to know is I’ve been working extremely hard for the last five years ever since graduating. I’ve finally saved up a 20% deposit to purchase my first property and be on my way to building a property portfolio, which is something that I’ve always wanted to do. However, I sort of have an internal debate with myself and I always seem to get conflicting opinions or ideas on this online, and I was hoping that you can clarify it for me because I do value both your opinions. Now my question is: does it make more financial sense to own your own home, or does it make more financial sense to be a rentvestor? So rent a home and accumulate properties whilst renting. If you can clarify that for me, I will forever appreciate that. Thank you again, guys. Look forward to catching up on all your podcasts. And really look forward to running into you guys and attending any of your seminars if you hold any seminars. Thank you.  

Bryce Holdaway
Rentvesting versus buying your own home. The modern debate.  

Ben Kingsley
Yeah, it’s an interesting one and we’ve covered this several times. And we’ll make sure we put in the show notes, just a link to the article that we did for Money Magazine on this particular subject. Because from Mark’s point of view, the modelling suggests and we’ve got to be very careful here because if anything changes in terms of regulation and around tax returns and negative gearing and capital gains tax and all of that type of thing, that can potentially have an impact on rentvesting.  

So we talk about if you’re going to rentvest in theory and you’re building a plan for the future, you will continue to rentvest indefinitely. Now that’s the classic model of rentvesting as opposed to getting on the property ladder, because you can do very well in terms of buying that first home: whether it be a flat as we were just talking about, or a townhouse and getting into the market, and then leveraging from the growth in that to buy your next one and buy your next one. That is also an opportunity to build wealth over time.  

I mean, the goal is to potentially try and retain the first property that you bought and keep retaining them if you go on that journey. And that’s been very consistent with the story of my past: other than the first property that I bought, which I got that bad advice for and sold that should still be in the portfolio today. So that is the question. But technically speaking, we outline the pros and cons of the concept of rentvesting. And from the cons point of view, just remember you could be kicked out of your property. There’s potentially what people think: “Why are you renting? It’s probably better to own.” There’s a lot of great debate and you’re having that own debate with yourself.  

So work through those pros and cons. But currently financially (depending on the assets that you buy and if they perform as per the forecast in the models) rentvesting will give you a greater financial return. But that said, remember your home is your castle; it’s yours. So you’ve got to weigh up what’s important to you. And I think that’s the important message here around your goals. If financial freedom and retiring early and those types of things are what drives you, then you may choose to rentvest. But if it is about comfort, ownership, making it your own and having a steady, less aggressive, staged program to retirement, you’ll be well served by just taking action, whichever way you go.  

Bryce Holdaway
Rentvesting has become really popular in the last 5-10 years Ben, but to me it’s a lifestyle discussion. I’ve rentvested for a fair bit of my time: I’m a Perth boy, I’ve lived on the Gold Coast, I’ve lived in Brisbane, I’ve lived over in London, Ben. I moved to Melbourne, I went back to Brisbane, I’ve moved back to Melbourne. It just doesn’t make sense to keep transacting when you’re doing that, in your own home, I mean. So you need to think about what your lifestyle is. Are you someone who has lived in the same part of the world forever, and are likely to stay in the same part of the world forever? It kind of makes sense that you put the big rock in the jar.  

Whereas if you’re leaning towards someone like me, who’s a Perth boy, who’s ambitious… I wanted to move around a lot. So if that’s part of your thinking, well then that needs to be (taken into consideration) because the government’s got a lot of money with stamp duty, Ben, you don’t need to keep giving it to them, right? So there’s two opposite ends of the scale. And so I obviously live in my own home (now). It’s a financial versus emotional thing. There’s a feeling in your soul of living in your own home, that you can’t get from not living in your own home. But in contrast, it can be a very, very financially rewarding experience to rentvest only. Because you can go and rent someone else’s place in a really awesome lifestyle location at a much reduced (price)… like a penthouse, a palace, whatever you want to do, and let someone else worry about all the maintenance and the expenses. So that’s one way to do it.  

And the other thing I’d say too, Ben, is my thinking in my 20s matured to my 30s, which has now matured even further to my 40s. So, you said it really well before that rentvesting is a path that it’s not easy to jump ship when you’re midway through. Because if you go hit the handbrake and go: Actually I want to put the big rock in the jar now… that becomes challenging. Because it’s like when you’re using a program on your computer that all of a sudden just draws a heap of RAM that stops everything else… that’s what it does when you’re buying your own home. It draws a lot of resources.  

You know, there’s no tax advantage. The banks look at you differently when they service, all that sort of stuff. So rentvesting can’t be a fad. It has to be something that you think that you’ll stay the course on because it has received a lot of popularity. But also, beware to the 20s who think about rentvesting because when you’re 20s, you’re footloose, fancy free, no commitments. Think that life is one big party, right? No, actually, that’s not true; that’s a bit generalistic. But you know what I mean. Like you’ve just got all these free thoughts in your 20s that you don’t necessarily have to think about when you get to your 30s and 40s. So that’s what I would say about the two strategies, because I think if you put them back-to-back: financially, it stacks up to be a rentvester. But that’s if you live in a vacuum, and you don’t throw emotions into the mix.  

Ben Kingsley
Yeah, I mean obviously as rentvesting has become more and more popular, people are using that term for when they might buy a property. So they live with mum and dad; they bought a property because their mum and dad have helped them out, which is great. They’re renting that property out, but they have no intention of living in there. That was just going to be an investment. And then they go and rent somewhere closer to the city so they can be with their friends and, you know, obviously meet new people and potentially meet their future life partner. Right. Now that’s over a 5 or 10-year period.  

Now, was their intention to keep you know, rinse and repeating on that model? That’s what we would call rentvesting. But some people just sort of say, you know, and spruikers and potentially advisors might say, well, just rentvest. And now for us, that’s like, okay, well, if that’s the plan that you hold that asset for 10 years… because that should be the minimum time frame that you ever hold an asset where you get the best benefit, because you’re going to have to pay some capital gains tax if it wasn’t your principal place of residence. And then you’re going to turn that into the deposit for your new home, for your new future husband or future wife, that’s different, right? So we wouldn’t necessarily call that long term rentvesting and financially it wouldn’t have the same level of return. 

So that’s where we come back to that important point is we just want you to act. We don’t care, you know, and act with a timeframe of 7-10 years, not with a timeframe of 3-5 years. Because if you’re acting with a time frame of 3-5, you put yourself in a corner and you run the risk of not necessarily getting that capital growth. And the amount of capital growth that you’ve probably realized at that point in terms of the compounding return will probably just be enough to not only just cover the stamp duty, but also the interest that you’ve paid on that property over time. And then you’ve got to pay 50% to the government of the income that you earn or whatever as capital gains.  

So that’s why it’s important to sort of say if you’re going to get on the property ladder, we would say go and live in it if you can and that’ll be a principal place of residence. If your circumstances change and you’ve got to move out, it’s still your principal place of residence for up to six years. So just be mindful of that. So that means that any capital gains potentially (and speak to your tax agent about that) would be capital gains tax free. But that’s ultimately what we’re talking about. So if you’re going to rentvest it’s a long-term program where the cost of your rent is cheaper than the mortgage that you’re paying and with interest rates as low as they are at the moment, there still might be an argument to actually get out and get that mortgage first and go and live in that property. So it is definitely a changing world when it comes to rentvesting.