Rentvesting has become a popular trend, but the numbers show it could have serious consequences for your future. In this discussion, James and Jess explore why rentvesting might feel appealing in the short term, yet ultimately risks ruining your retirement if it becomes a long-term strategy.
What Is Rentvesting and Why Is It So Popular?
Rentvesting is when someone rents the home they want to live in, usually in a desirable suburb, while purchasing investment properties elsewhere that are more affordable. It’s marketed as a way to enjoy the lifestyle you want while still investing in property.
Jess explained that many people are drawn to this because of social pressures, school zones, or simply wanting to keep up appearances. James pointed out that fatigue with high interest rates and falling house prices has also made rentvesting attractive. Renting can provide flexibility, but it also comes with instability and rising long-term costs
The Numbers Don’t Lie
James and Jess modelled two financial scenarios for a 34-year-old couple earning $250,000 annually with $100,000 in expenses.
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Scenario One (Home Ownership + One Investment Property):
Buying a $1.5 million home with a $900,000 mortgage plus one investment property. By age 100, this couple would have $2.7 million (inflation-adjusted) remaining, plus the value of their home.
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Scenario Two (Rentvesting + Multiple Investment Properties):
Renting a $1.6 million lifestyle property for $1,300 a week while owning several investment properties. At first, this looks like a smart way to leverage equity—but projections showed the couple ran out of money at age 82. The rising cost of rent outpaced their income and returns, leaving them financially stranded.
This stark difference demonstrates why rentvesting can ruin your retirement: the compounding cost of rent erodes wealth faster than investment returns can keep up.
Short-Term Appeal vs Long-Term Risk
Jess acknowledged that rentvesting can make sense for a season – such as when families want to live in a specific school zone or enjoy a certain lifestyle. But both hosts agreed: it should never be your forever plan.
Rent is inflationary and keeps rising over time, while mortgage repayments are deflationary – they decrease in real terms and eventually disappear. Owning your own home remains the single biggest factor in securing a comfortable retirement.
Key Takeaways
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Rentvesting is renting your dream home while investing in other properties.
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It’s popular due to lifestyle pressures, flexibility, and high mortgage costs.
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Financial modelling shows homeowners finish retirement with millions, while rentvestors risk running out of money by 82.
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Rent rises with inflation, while mortgage repayments shrink over time.
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Rentvesting may work short term, but without a plan to eventually own your home, retirement security is at risk.
Next steps:
If you’d like a tailored plan that balances lifestyle and long-term security, Lighthouse Wealth can help build a strategy that works for you.
If you’d like to learn more, check out these other episodes below.
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Disclaimer:
The information in this article is general information only, is provided free of charge and does not constitute professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article – including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.
