Do you know how rentvesting builds wealth from Bullsbrook?

Rentvesting means renting where you want to live and buying an investment property where you can afford to build wealth. For residents in Bullsbrook, this strategy can make sense when local property prices or lifestyle preferences don't align with buying a home in the suburb itself.

The approach works because you're not tied to buying in the same place you need to live. You can target suburbs with stronger rental demand, lower entry points, or better long-term growth prospects while continuing to rent in Bullsbrook or nearby. The trade-off is that you won't qualify for owner-occupier interest rates or first home buyer concessions, but you will gain access to investment loan products designed for property investors and the ability to claim tax deductions on most holding costs.

Why Bullsbrook residents consider rentvesting

Bullsbrook sits roughly 35 kilometres north of Perth's CBD, with a median house price that has risen steadily as the northern corridor develops. The suburb attracts families looking for space, acreage, and a semi-rural lifestyle. If you're renting here and value the location, rentvesting lets you stay without stretching to buy in an area where property prices may exceed what you can borrow or want to commit.

The alternative is to buy an investment property in a suburb with lower entry costs, higher rental yields, or stronger tenant demand. You live where you want and invest where the numbers support your goals. The rental income from the investment property helps cover the loan, and the property itself becomes a foundation for building equity over time.

How investment loans differ from owner-occupier loans

Investment loans attract a higher interest rate than owner-occupier loans, typically around 0.3 to 0.6 percentage points more at current variable rates. Lenders price this difference to reflect the higher risk they associate with investment lending. Borrowing capacity is also calculated differently because lenders apply a shading factor to rental income, usually recognising only 80 per cent of the rent to account for vacancy periods and maintenance costs.

You'll also need a larger deposit. Most lenders require at least 10 per cent genuine savings for an investment property, and many prefer 20 per cent to avoid Lenders Mortgage Insurance. If you're using equity from an existing property, the same loan-to-value ratio limits apply. The upside is that once approved, you gain access to investment loan options from banks and lenders across Australia with features like interest-only repayments, offset accounts, and the ability to refinance as your portfolio grows.

Rental income and borrowing capacity

Rental income increases what you can borrow, but not dollar-for-dollar. Lenders apply an 80 per cent shading factor to the expected rent, then add that amount to your other income when calculating serviceability. They also test your ability to repay at a rate 3 percentage points above the actual loan rate, as required by APRA.

Consider a buyer renting in Bullsbrook who identifies a two-bedroom unit in a Perth suburb with strong rental demand. The unit generates $450 per week in rent, which equals $23,400 annually. The lender applies the 80 per cent shading factor, recognising $18,720 as income for serviceability. That additional income can increase borrowing capacity by $80,000 to $100,000, depending on the applicant's other commitments and the lender's assessment rate.

The rental income doesn't eliminate the need for genuine savings or a deposit, but it does improve serviceability and allows investors to borrow more than they could for an owner-occupied purchase without rental income.

Interest-only versus principal and interest repayments

Investment loans can be structured as interest-only or principal and interest. Interest-only repayments are lower each month because you're not paying down the loan balance, which can improve cash flow if the rental income doesn't fully cover the loan cost. The interest-only period typically lasts up to five years, after which the loan reverts to principal and interest unless you refinance or renegotiate.

Principal and interest repayments reduce the loan balance over time and build equity faster. The monthly cost is higher, but you're working toward owning the property outright. Some investors prefer principal and interest from the start because it creates a buffer if rental income drops or interest rates rise. Others prioritise cash flow and choose interest-only, reinvesting the difference into another deposit or paying down non-deductible debt like a future owner-occupied home loan.

Both structures have tax implications. All interest on an investment loan is deductible, whether you're on interest-only or principal and interest. The principal portion of a principal and interest repayment is not deductible.

Tax deductions and negative gearing under current rules

Under current rules, interest on an investment loan is deductible against your total taxable income, including salary and wages. You can also claim deductions for property management fees, council rates, landlord insurance, maintenance, and depreciation on the building and fixtures. If your total rental expenses exceed your rental income, the loss can be offset against other income, reducing your overall tax.

For properties acquired before 7:30pm AEST on 12 May 2026, these rules continue to apply. For properties acquired on or after that date, new rules take effect from 1 July 2027. Net rental losses on established dwellings will be quarantined and can only be offset against other residential rental income or carried forward to offset future rental income or capital gains. Losses cannot be offset against salary or wages. The exception is eligible new residential dwellings, which retain full negative gearing benefits.

If you're rentvesting in Bullsbrook and planning to buy an investment property, the timing of your purchase and the type of property you choose will directly affect your tax position from mid-2027 onward.

Choosing between established and new-build investment properties

Established properties in inner and middle-ring suburbs often offer stronger capital growth and lower vacancy rates, but rental yields can be modest. New-build properties, particularly apartments and townhouses in outer suburbs or regional centres, typically deliver higher rental yields and retain full negative gearing and capital gains tax benefits under the new tax rules from 1 July 2027.

The legislative definition of an eligible new build includes dwellings constructed on previously vacant land and properties where the number of dwellings increases, such as a duplex replacing a single house. Knock-down rebuilds that don't increase the dwelling count are not eligible. If a new-build property is occupied for more than 12 months before you purchase it, it also loses eligibility for the tax treatment.

For Bullsbrook residents considering rentvesting, the choice depends on whether you prioritise tax deductions and cash flow or long-term capital growth. Both approaches can build wealth, but the tax treatment after 1 July 2027 creates a clear advantage for new builds if you plan to negatively gear the property.

Loan-to-value ratio and deposit requirements

Most lenders cap investment loans at 90 per cent LVR, meaning you need at least a 10 per cent deposit plus costs. Borrowing above 80 per cent LVR triggers Lenders Mortgage Insurance, which can add several thousand dollars to your upfront costs. LMI protects the lender if you default, but you pay the premium and it's not refundable.

If you already own a property in Bullsbrook or elsewhere, you may be able to use equity as your deposit rather than cash savings. Lenders will value your existing property, calculate 80 per cent of that value, subtract what you owe, and release the difference as usable equity. That equity can then fund the deposit and costs on the investment property. The downside is that your existing property becomes security for both loans, which increases risk if property values fall or your financial circumstances change.

Debt-to-income limits for investment loans

From 1 February 2026, lenders must limit the proportion of new investment loans they write at a debt-to-income ratio of 6 times or greater. The cap is 20 per cent of each lender's new investor lending. If your total debt across all loans exceeds six times your gross annual income, you may find it harder to get approved, particularly if you're applying to a lender that has already reached its cap for the quarter.

The DTI measure is applied at the lender level, not the borrower level, so switching lenders won't change your DTI ratio. It will, however, give you access to a lender that still has capacity under the cap. This is one reason working with a broker can help, as we can identify which lenders have capacity and which products suit your situation without triggering multiple credit inquiries.

What happens when you're ready to buy your own home

Rentvesting is often a stepping stone, not a permanent strategy. Once you've built equity in the investment property, you can use that equity to fund a deposit on an owner-occupied home. You'll need to refinance the investment loan to release equity, and the lender will assess your ability to service both loans at the same time.

Some investors choose to sell the investment property and use the proceeds to buy their home. Others keep the investment property and carry both loans, which works if rental income and your wage can support the combined repayments. If you decide to sell, capital gains tax will apply to any gain made after you purchased the property. The current 50 per cent CGT discount applies to properties acquired before 1 July 2027 for gains accruing before that date. For gains accruing after 1 July 2027, the discount is replaced with indexed cost base and a minimum 30 per cent tax rate unless the property is an eligible new build.

Rentvesting gives you time to build equity and serviceability without committing to a suburb you're not ready to settle in. When you're ready to buy your own home, the investment property becomes a financial asset that supports that goal rather than a barrier to it.

If you're renting in Bullsbrook and weighing up whether rentvesting makes sense for your situation, call one of our team or book an appointment at a time that works for you. We can walk through your borrowing capacity, investment loan options, and the tax implications under the current and upcoming rules so you can make an informed decision.

Frequently Asked Questions