Rentvesting involves renting where you want to live while buying an investment property where your budget secures the best asset. It makes sense in Melbourne’s South East in 2026, although recent rate rises have tightened cash flow for those employing this strategy.
Why the South East suits rentvesting
Entry prices from $580,000 to $720,000 are accessible for most buyers in the current market. A lower purchase price results in a smaller loan and lower exposure to rate rises.
Yields and rental demand
Yields of 4.0 to 4.5 per cent keep holding costs manageable relative to other Melbourne markets. In Officer and Pakenham, vacancy rates below 2 per cent and ongoing population growth support firm rental demand.
Long-term growth prospects
Infrastructure investment and population growth continue to drive demand in the corridor. This makes Officer, Pakenham, and Wantirna more resilient than Melbourne’s outer western and northern corridors.
The honest reality
Two RBA rate rises in the past two months have put fresh pressure on buyer borrowing capacity and cash flow. Most properties in Officer and Pakenham will be negatively geared, and the shortfall is larger than it was a year ago.
Questions to consider
- Have you run updated numbers with your mortgage broker to see how the two recent rate rises affect your borrowing capacity?
- Can your current cash flow sustain a larger negative gearing shortfall than was required twelve months ago?
- Are you basing your decision on real-time data rather than figures from six months ago?
Talk to KR Peters for a straight-talking appraisal with no obligation.
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Market information is general in nature and reflects conditions
at the time of publication. For advice specific to your property,
contact KR Peters.