Rentvesting: The Unconventional Path to Property Ownership

Feeling priced out of your dream neighbourhood? You're not alone. Across New Zealand, aspiring homeowners face the harsh reality of skyrocketing property prices in our most desirable cities. But what if there's another path to property ownership that doesn't require million-dollar mortgages or sacrificing your lifestyle?

Rentvesting – renting where you live while investing in property elsewhere – is changing how Kiwis think about entering the property market. This approach makes perfect sense when you break it down: Why stretch yourself financially to buy in Wellington, Auckland or Queenstown when you could maintain your current lifestyle while building wealth through property in more affordable regions? Picture continuing to rent your perfect apartment close to work, friends and favourite cafés, while simultaneously owning a cashflow-positive investment property in places like Palmerston North, Levin or Invercargill.

The beauty of rentvesting lies in its flexibility and financial strategy. Your tenants help pay your mortgage while you build equity and potential capital growth. For many first-home buyers, young professionals, families waiting for the right school zone timing, and new migrants, this approach provides an achievable entry point to the property ladder. While there are important considerations – managing both rent and mortgage payments, understanding investment loan structures, tax implications, and landlord responsibilities – many find the benefits outweigh these challenges.

I've seen this strategy transform the financial trajectory for clients who thought homeownership was years away. One professional Wellington couple, frustrated by local prices, purchased a modern, tenanted townhouse in Whanganui while continuing to rent in the capital. Today, they're building equity and planning their second investment property. Remember, renting isn't "throwing money away" if you're using that time to grow your wealth elsewhere. Curious if this could work for you? Let's run the numbers together and explore what's possible for your property journey.

Chapters

• 0:00 Introducing Rentvesting
• 1:17 Pros and Considerations
• 2:54 Real-Life Success Story
• 3:30 Who Benefits from Rentvesting
• 4:18 Final Thoughts and Invitation

Transcript

Speaker 1: 0:10

Kia ora. Welcome back to that Homeland Hub. I'm your host, zibunisa Alimova, mortgage advisor, mom of four and someone who is all about helping people find creative ways into the property market. Today's episode is all about rentvesting, a term you might have heard thrown around lately, especially as property prices keep climbing. So what is rentvesting, and is it the right move for you? Let's dive in. What is rent vesting?

Speaker 1: 0:37

Rent vesting is a strategy where you rent the home you live in but buy an investment property somewhere else, usually in a more affordable area. Why would you do that? Because for many people, especially in cities like Wellington, auckland or Queenstown, buying where you live is just too expensive. But that doesn't mean you shouldn't, you should just sit on the sidelines. So rent-vesting says live the lifestyle you want, but still build your future through property. How does it work? Let me give you an example. Say you live in Wellington, close to your job, your kid's school or your favorite beach, but buying a three-bedroom house nearby would cost over $1.2 million out of reach for your budget. Instead, you can stay in your rental, maybe $700 per week, but use your deposit and borrowing power to buy an investment property in Palmerston, north Levin or even Invercargill for $500,000. The rent from the property helps cover the mortgage and you're now a homeowner and a landlord, even if you're still renting your place.

Speaker 1: 1:47

What are the pros of investing? You'll ask Get on a property ladder faster. No need to wait until you can afford your dream home. Flexibility Keep living to wait until you can afford your dream home. Flexibility Keep living in the area you love. Potential rental income. Tenants help you pay your mortgage. Build equity and capital growth Long-term wealth strategy.

Speaker 1: 2:08

But look, there are things to consider. Of course, it's not all sunshine and instant wins. Here are some important things to keep in mind. You're still paying rent, so it's important to budget well. You need to treat your investment like a business. Maintenance, tenants and taxes are all part of the deal. Loan structure matters Investment loans can have different rates and conditions. Tax implications, rental income is taxable and you need to understand deductibility rules and bright line tests. That's where talking to an advisor and your accountant really helps.

Speaker 1: 2:44

Let's look into a real story. I had a couple come to me, both professionals living in Central Wellington. They were getting frustrated because they couldn't afford anything nearby that they actually wanted to live in. We explored rentvesting. They ended up purchasing a modern townhouse in Whanganui, fully tenanted, with great cashflow. Today they still rent their dream apartment in Wellington, close to work and lifestyle, but they've started building equity and planning for a second investment.

Speaker 1: 3:14

Renting doesn't mean you're throwing money away If you're using that time to grow your wealth in a different way. So who is rent vesting good for? First-home buyers priced out of the area, young professionals who value lifestyle flexibility, families waiting for the right school zone or timing Migrants or new Kiwis looking for smart entry points. This strategy isn't for everyone, but for some it's the perfect stepping stone. And remember, if you're not buying a house to live in, usually well, you cannot use your KiwiSaver. So something to consider. And final thoughts Rent vesting flips the traditional script.

Speaker 1: 3:56

You don't have to own the home you live in, at least not right away, to start building your future. If you're curious about whether rent vesting could work for you or where you could buy based on your budget, get in touch. I'd love to run some numbers with you and help you explore what's possible. Thanks again for tuning into that Home Loan Hub. If you liked this episode, hit that follow button, leave a review or share it with someone who's feeling stuck in the rent trap, because the path to home ownership might be different than what you expected, but it's still possible. Talk soon.