For many New Zealanders, owning a home in the suburb they love feels increasingly out of reach. High prices in major centres such as Auckland, Wellington, Christchurch, and Tauranga mean that buying where you want to live often requires a far bigger deposit, or far higher repayments, than most households are comfortable taking on. But there is a strategy that more people are embracing: rentvesting.
Rentvesting flips the traditional homeownership model. Instead of buying your first home in the same suburb where you want to live, you rent where you want to live and buy where you can afford to invest. This approach allows you to maintain your lifestyle while still entering the property market and building equity.
At its core, rentvesting is a financial strategy, not a compromise. It means:
- You rent a home to live in a location that suits your work, lifestyle, school zones, or amenities.
- You purchase an investment property in an area that offers better affordability, stronger rental returns, or higher growth potential.
- Your tenants help pay the mortgage, while you benefit from long‑term capital gains and the equity created through loan repayments.
Instead of stretching your finances to buy a home in an expensive suburb, or waiting years to save a bigger deposit, you enter the market sooner by buying in a more affordable location.
Why does it work so well in New Zealand?
A property manager handles advertising, viewings, reference checks, and credit screening. This reduces the risk of rent arrears, tenant damage, or early vacancy, which can cost landlords far more than a management fee.
New Zealand’s property market is ideal for rentvesting because regional towns often offer stronger gross yields and lower entry prices. For example, towns like Tokoroa, Greymouth, or parts of Invercargill can offer yields over 6%, while major cities often sit closer to 3.5–4.5%. That means in many cases, the rent you receive from your investment can significantly offset the mortgage, making the holding costs manageable.
Meanwhile, renters may find it cheaper to pay weekly rent in their preferred neighbourhood than to service a mortgage there. In many parts of the country, rent remains lower than mortgage repayments for the same type of home. Below are examples of how rentvesting can benefit tenants at different life stages with varying needs.
Imagine a 28‑year‑old professional working in central Auckland. They love the city lifestyle, with cafes, gyms, and nightlife close by, and owning a one‑bedroom apartment in the CBD might cost $650,000–$750,000. The mortgage repayments would be high, and the body corporate fees would add pressure.
Instead, they rent a modern apartment for $550–$600 a week while purchasing an investment property in Greymouth for around $400,000. With median rents around $480 per week, the gross yield is over 6%, meaning the rental income offsets much of the mortgage. Over time, the property appreciates in value, equity builds, and the investor continues to enjoy their city lifestyle.
A young family may want to live in a top school zone such as Auckland Grammar or Wellington College, where house prices can exceed $1.5 million. Rather than stretching their budget, they rent a home in the school zone for $850–$1,200 per week, while investing in a regional property for under $500,000. The investment's rent supports the mortgage, and the family secures the education and lifestyle they want without sacrificing financial stability.
A couple who one day want to buy their forever home might start by purchasing a high‑yield rental property. The equity they build over five to seven years, combined with capital growth, becomes the deposit for the home they truly want. Rentvesting is a stepping stone to eventual owner‑occupancy.
Rentvesting gives you:
- Earlier entry into the property market
- Faster equity growth, thanks to tenants contributing to your mortgage
- Flexibility to live where you want
- Diversification, particularly if you buy in growth markets
- A pathway to future homeownership
By separating where you live from where you invest, you remove many of the barriers stopping people from buying property in the first place.
