
Is your dream suburb too expensive? 'Rentvesting' could be the solution
There's a very Kiwi idea that owning the home you live in is the pinnacle of success. You get the keys, throw a housewarming, maybe dig a veggie patch, and settle in with the satisfaction that you've 'made it'.
But what if that belief is getting in the way of smarter decisions?
The Tuckers would like to return to New Zealand and buy a home one day. (Source: istock.com)
Let's be honest, trying to buy your first home in places like Auckland or Queenstown is brutal.
ADVERTISEMENT
Plenty of people need to live in those places for work reasons, yet prices are sky-high, and every extra year it takes to save that deposit is another year of compromise.
Smaller house. A landlord. Longer commute. Another year where you're paying someone else's mortgage, instead of your own.
But what if you didn't have to buy where you live? What if you could rent your dream lifestyle, and invest somewhere else? That's the idea behind rentvesting, and it might be worth a look.
Rentvesting 101
At its core, rentvesting is exactly what it sounds like.
You rent your home, and buy a house elsewhere, typically in a more affordable area with better financial returns.
It's a strategy that Ilse Wolfe knows well. Wolfe is a seasoned property coach and investor who recently made the move herself. She sold her Grey Lynn home and shifted to a rental on Takapuna Beach.
ADVERTISEMENT
'Rentvesting is basically upgrading your lifestyle, going to a location that you want that's usually more premium than where you could afford to have a mortgage,' she says.
'So it's a lifestyle upgrade, for less of a weekly outgoing.'
Wolfe and her husband looked at the cost of owning their million-dollar home in Grey Lynn, and compared it to what that same amount could do if they were to buy in a cheaper area, rent out that house and have the mortgage paid by tenants, while gleaning a little extra income in the process. And all while renting a lovely home themselves in a beachside area where properties tend to be even more expensive than in Grey Lynn.
But could you go back to renting?
Here's where the emotional friction kicks in. For most of us, the idea of renting forever can feel… unsettling.
Especially if you have kids. Especially if you've finally found a school zone you like. Especially if you want to redecorate without having to ask for permission. Or if you're just tired of moving house every time the landlord decides to renovate.
School zones are often a major consideration for families choosing where they live. (Source: 1News)
ADVERTISEMENT
Wolfe understands that hesitation. She says one of the biggest mental hurdles in their decision was whether they were about to uproot their children's lives, including school and friendships.
But after six weeks in their new rental, they were sure that it had been the right call, even if it was daunting at the time. Ttheir landlords live next door, have owned the property for decades, and treat it with pride. She credits that for creating a sense of mutual care and community.
'They come around and check on us,' she says. 'And the cool thing is… we have neighbourhood drinks. All of the neighbours on our street, three or four times a year, get together. So we're in a real community here and the kids are invited.'
The numbers still matter
Of course, warm fuzzies aren't enough. Rentvesting only works if it stacks up financially.
If you're a first-home buyer, you may also need to change strategy, if you're mainly saving into your KiwiSaver.
Your KiwiSaver can only be used for a first home deposit if you'll actually be living there.
ADVERTISEMENT
You may also need to bring in a pro to help you run the numbers.
Get an accountant to help you run the numbers. (Source: istock.com)
Wolfe emphasises that anyone considering rentvesting should chat to an accountant early, as the move could have implications for things like ownership structure, interest deductibility, or capital gains exposure.
She also stressed the importance of not pushing your weekly rent budget to the limit just because a property is exciting. There is the possibility of rent increasing, and you need to give yourself buffer to afford that possibility.
'You don't want that mental load on top to have that concern. There's enough to juggle these days.'
Is this a good first-home buyer strategy?
Wolfe said more of her clients, especially younger couples, are now rentvesting as their entry point into property.
ADVERTISEMENT
Some already have families and choose to rent a home they love, while using their deposit to purchase cashflow-positive rentals in more affordable parts of the country.
She described one couple who had lived in their rental for years and didn't want to downgrade just to 'get on the ladder.' Instead, they used their savings to buy two investment properties in regional New Zealand.
Wolfe helped them turn each one into a four-bedroom rental, earning more than enough to cover costs, even after the arrival of their first baby.
'They're making money from a rental property, they're living in a home that's better than what they know they could otherwise afford,' she says. "So they are moving forward and they now have two rental properties before they've even bought their own home.'
Rentvesting isn't a silver bullet. It won't work for everyone. And it's definitely not the mainstream path — yet. But if you feel like you're stuck, priced out of buying where you want to live, and getting nowhere fast, then rentvesting could open up another path.
One where you still make progress, even if it doesn't look like the traditional 'first home' story.
The information in this article is general in nature and should not be read as personal financial advice.
ADVERTISEMENT

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles

1News
17 hours ago
- 1News
South Island pulls ahead as regional divide widens — economist
New Zealand's regions are showing signs of recovery, but there is a growing economic performance divide between the North and South Islands, a new report from Kiwibank says. The Annual Regional Note, released on Saturday, showed that the South Island was continuing to outperform the North and that while most regions recorded gains, progress remained uneven. The national average score has lifted from 3 to 4 out of 10. Kiwibank chief economist Jarrod Kerr said the economic tide was turning. "Most regions have seen at least some improvements, but the recovery is far from even." ADVERTISEMENT Southland and Otago lead with scores of 5, driven by a building boom and tourism rebound respectively. Northland, Taranaki, and Gisborne scores declined. Wellington and Auckland lifted slightly, with New Zealand's biggest city supported by population growth. "The further south you go, the more optimistic people are," Kerr said. "So you think about Northland and Taranaki and Gisborne, they've gone backwards over the last year. And you think further south, you know, going to Otago and Canterbury, they're actually doing a lot better." He said the divide could become a "self-fulfilling prophecy" with people leaving places such as Auckland and moving to Christchurch. "It is more affordable and, these days, you don't necessarily have to be in the largest cities — a lot of people are working from home." Kiwibank chief economist Jarrod Kerr. (Source: 1News) ADVERTISEMENT Kerr said the housing market had remained largely "locked in lateral moves". "Since stabilising in early 2023, national house prices are up just 1.8%. Since the Reserve Bank began cutting rates in August, house prices have only lifted by half a percent — and, in many regions, they're still flat or falling." Labour market conditions were also mixed. Otago had the strongest employment growth in the country, up 8%, while Taranaki recorded the steepest employment drop at -8%. Retail sales remained subdued and below their average levels in most regions, with Wellington recording the steepest at -3.3%, while regions such as Waikato, Northland and the Bay of Plenty improved slightly on last year. Consumers were still being cautious, Kerr said, "They're rebuilding balance sheets, not rushing to the shops just yet." 'Time for the Reserve Bank to step on it' ADVERTISEMENT Kerr told 1News he would like to see the Reserve Bank "go from having their foot firmly on the brake, to putting it in neutral, to actually putting their foot on the accelerator". He believed the Official Cash Rate should fall from its current position at 3.25% to 2.5% to provide meaningful stimulus to the economy. "We think the risk, if anything, is that inflation falls too far and falls below 2% because the economy is so weak. So, job done on the inflation front, it's time to stimulate growth."


Otago Daily Times
a day ago
- Otago Daily Times
Customer service manager's focus
New Ascot Hotel executive manager Oytun Cevik at the hotel. PHOTO: TONI MCDONALD Ascot Hotel's new executive manager Oytun Cevik is no stranger to making beds or carrying luggage. However, the industry was much more than making beds, he said. Developing a great customer experience should be the industry's end goal. "You have to put yourself in the guest's shoes." Being greeted with a smile and staff building a rapport with customers as soon as they walked through the door was key. The diversity of hospitality required flexibility to its demands, Mr Cevik said. Besides the nation's attractive scenery, he believed New Zealand had a unique hospitality culture that was attractive to international visitors. "I think Kiwi hospitality is something that you really need to come and experience ... It's definitely down to earth. Friendliness and welcoming, that's what brings people back." Capturing repeat business was core to the industry's survival, he said. After graduating in Turkey with honours in tourism and management, he moved to the United States to work in the housekeeping department at the 1415ha, 300-room Chateau Elan Winery and Resort in Georgia. His New Zealand industry experience started in Queenstown where he met his future wife, Southland-born Emma. Industry doors continued to open to the couple and their two daughters, Ruby, 9, and Scarlet, 12 — offering new opportunities on the hospitality management ladder which led to his Ascot Park Hotel executive manager role. He always believed a move back to the South Island would be part of their future where they would be closer to family, he said. He had done the hard yards in housekeeping, front office, food and beverage service and accounts. "You don't become a GM [general manager] for a hotel overnight — you have to start from scratch." While he was no micro-manager, he was still happy to pitch in and make beds and clean bathrooms if it was required. 'Being a GM is not something that you always do from behind the desk. You have to be really ready with multiple hats throughout the day ... you have to be really flexible with what you do around the hotel. "It's hospitality — wherever it's required, you need to step in and do it with the team." Meeting people from different cultures and backgrounds was a part of the industry he particularly enjoyed. "It's embedded into Ascot Hotel ... that's what I love about coming to work every day and sharing things with my team and what they're achieving every day." Invercargill Licensing Trust (ILT) chief executive Chris Ramsay said Mr Cevik's record of success across all his previous positions had the ILT executive team excited for the future of the Ascot Park Hotel. The role was a highly contested position which attracted international interest from a range of highly skilled and experienced hotel managers, he said. "Oytun stood out throughout the process, having built a career in hotels that started in America at the Chateau Elan Winery and Resort Atlanta and has included major hotel brands across New Zealand." - By Toni McDonald

RNZ News
2 days ago
- RNZ News
Local food delivery company struggling against competition
business food 36 minutes ago Getting food delivered to the door has become a huge business, and in one New Zealand town the competition between two operators has led to complaints to the Commerce Commission. Nelson's Yummi food delivery business launched a decade ago but in recent years it has struggled. Two years ago another Kiwi-owned nationwide company, DeliverEasy, Yummi began losing clients. Yummi founder George Evans spoke to Melissa Chan-Green.