So you want to get on the property ladder, but you also love your lifestyle. Living close to the city, your workplace, and your favourite cafes and gym is important to you.
The challenge is that the places you want to live in aren’t necessarily the ones you can afford to buy in.
This is where rent-vesting comes in.
Rent-vesting is a strategy where you rent in the area where you want to live while buying investment properties somewhere else. It’s gaining popularity, especially with younger professionals, because it offers the best of both worlds: flexibility and ownership.
But is it right for you?
The Benefits of Rent-Vesting
Flexibility and Freedom
As a renter, you can move whenever you need to. Want to shift cities for a new job? No problem. Want a bigger place or a shorter commute? Just give notice.
And importantly, when something breaks, it’s your landlord’s problem, not yours.
Marina from our team rent-vested for over 10 years. She lived in an Auckland apartment which she loved, close to her family and work, but it would have been a poor investment. So she rented it and invested elsewhere.
That’s the beauty of rent-vesting: you get freedom without losing investment momentum.
Invest Where the Numbers Work
The best property investments aren’t always in the best lifestyle locations. Maybe you want to live in Auckland’s Ponsonby. It’s vibrant and fun, but the returns are often low, and houses are expensive.
Rent-vesting lets you invest where the market fundamentals are stronger. You can target areas with lower purchase prices, higher yields, and good capital growth potential.
More Affordable Entry Point
For many people, rent-vesting is simply the only way to buy sooner. Instead of waiting years to save a deposit for a million-dollar home, you could buy a rental property in a more affordable area.
Here’s an example: Sheryl, one of our clients, lives in Auckland but has bought an investment property in Invercargill. The property in Invercargill is positively geared, which means she doesn’t have to put in any money out of her own pocket each month.
Rent-vesting has allowed her to take the first step without waiting for Auckland prices to come down.
The Drawbacks of Rent-Vesting
Of course, it’s not all upside. Rent-vesting does come with trade-offs.
KiwiSaver Limitations
You can’t use your KiwiSaver for an investment property. You can only use it for your first home, and only if you live in it for at least 6 months.
So if you want to rent-vest straight away, you’ll likely need to fund your deposit without KiwiSaver. That could mean saving longer or missing out on government contributions.
Some investors work around this by moving into their first property for 6 months to meet the KiwiSaver requirements, then renting it out. But that often means relocating temporarily.
Slower Portfolio Growth
Banks have different rules for owner-occupiers versus investors. For your own home, you might be able to borrow up to 80% of the property’s value. For an investment, it’s usually only up to 70% thanks to the Reserve Bank’s loan-to-value restrictions.
This means you need more equity in your investment before you can borrow against it to get into the next property. It can slow down how quickly you grow your portfolio.
Example: If you buy a $1 million investment with an 80% mortgage, that’s $800,000 in debt. But once it settles, banks only let you borrow up to 70%. So you’d need to pay down $100,000 before you can borrow again.
Less Control as a Renter
This is the obvious downside. Your landlord can raise the rent, ask you to move, or sell the property.
If you’re single or a young professional, that might not matter much. But if you have kids or want a pet, the instability can be frustrating.
That’s why rent-vesting often suits younger people without families better. Flexibility matters more than permanence at that stage of life.
Is This Right for You?
Rent-vesting can be a smart strategy. It helps you:
- Get into the market sooner
- Live the lifestyle you want
- Invest in higher-performing areas
But it comes with trade-offs: slower portfolio growth, missing out on KiwiSaver, and less control as a renter.
The key question is: what matters most to you right now, flexibility or stability?
In property investing, there’s no one-size-fits-all approach. It’s about weighing the lifestyle you want today against the wealth you want to build for tomorrow.
Ready to Learn More?
Don’t just think about getting on the property ladder. Take action and run the numbers. We can show you how rent-vesting might work for your specific situation.
Book a consultation with us today to discover how you can start building wealth through rent-vesting while living exactly where you want.
Because the sooner you start, the sooner your property portfolio can start working for you.
Give us a call on 09 630 2655 and let’s chat about your options.
