Rent-vesting is an approach where you rent the home you live in and buy an investment property in a more affordable area. It’s a strategy that gives buyers flexibility—especially those priced out of their local markets—but still allows them to build equity and enter the real estate market.
A New Path to Homeownership
Rent-vesting is an approach where you rent the home you live in and buy an investment property in a more affordable area. It’s a strategy that gives buyers flexibility—especially those priced out of their local markets—but still allows them to build equity and enter the real estate market.
How Rent-Vesting Works
Instead of buying a home in your expensive city, you purchase a rental property elsewhere—typically in a more affordable location—while continuing to rent your primary residence. According to Danielle Hale, chief economist at Realtor.com, this approach lets buyers “participate in the market” while maintaining their lifestyle and location preferences.
Who Should Consider Rent-Vesting
Rent-vesting may be a smart option if:
- You live in a city where buying is currently unaffordable
- You have a steady income but can’t afford to purchase nearby
- You want to start investing in property without changing where you live
This approach has become more common, especially among smaller investors. In the first quarter of 2024, buyers with ten or fewer properties made up 62.6% of all investor purchases—a record high.
Things to Think About First
Before you move forward with rent-vesting, consider the following:
- Is the rental market strong in the area you’re buying? Local demand, rental laws, and vacancy rates matter.
- Will you need a property manager? Managing a property from a distance can be challenging.
- Have you planned for all costs? Include mortgage payments, taxes, insurance, maintenance, and vacancies.
- Can you afford two housing costs if needed? A rental vacancy could leave you covering both your rent and mortgage.
Why Now Might Be a Good Time
Mortgage rates have recently dropped to 6.85% for 30-year fixed-rate loans—the lowest since March. Lower rates mean your monthly payment goes further. According to Redfin Chief Economist Daryl Fairweather, a buyer with a $3,000 monthly budget could afford a home that’s $20,000 more expensive than they could just a few months ago.
The Bottom Line
Rent-vesting isn’t for everyone, but it can be a useful path to property ownership when buying in your current city isn’t realistic. It requires financial planning, long-term thinking, and the willingness to manage a rental property. With the right preparation, rent-vesting could help you take your first step into real estate.
Thinking about rent-vesting? Let’s talk through financing options and find out if this strategy fits your goals. Reach out today for a consultation.