Rentvesting: A Modern Strategy with Old-World Roots
Rentvesting: A Modern Strategy with Old-World Roots
Andrew Bang – Boomerang Capital Partners
In preparing some investor materials, I ran across the concept of rentvesting, short for “rent where you live, invest where you can afford”. It is a real estate strategy growing in popularity among investors and lifestyle-driven households alike, and looked to be something that would be a thing in Phoenix. So I googled around a bit, spent some time with AI (this article I typed though, so I can’t blame AI) and made some calls. And I found out it's a thing, but it's just getting started.
At its core, rentvesting allows individuals to rent a home in a desirable location (typically for lifestyle or career reasons) while owning property elsewhere that generates income or appreciates in value. This decoupling of residence from real estate ownership flips the traditional narrative: rather than buying where you live, you buy where it makes financial sense.
Although rentvesting has gained visibility in markets like Australia and the United States over the last decade, the concept itself is far from new. In Europe, many residents—particularly in high-cost cities like London, Paris, and Berlin—have long practiced a version of rentvesting, albeit under different terms. For example, the UK has a well-established “buy-to-let” culture, where investors rent in central locations but purchase properties in more affordable regional towns. Similarly, the French "pied-à-terre" tradition allows individuals to maintain small urban rentals for work or convenience, while their owned properties are located in more rural or suburban settings. In Germany, where long-term renting is both common and culturally accepted, it’s not unusual for wealthier individuals to rent their homes while holding property investments across the country—or even abroad.
In recent years, rentvesting has gained momentum in global real estate hubs including Sydney, Toronto, New York City, Los Angeles, and Austin, where housing affordability and lifestyle preferences often conflict. As remote work, rising interest rates, and urban lifestyle priorities reshape housing decisions, rentvesting presents a flexible and financially strategic path for upwardly mobile individuals. It's especially appealing to younger professionals and high earners who value access to premium locations and amenities but who are also mindful of long-term wealth building.
Why Rentvesting Is Emerging in Phoenix
Phoenix, Arizona is now emerging as a key U.S. city where rentvesting is taking root. Historically known for its affordability and sprawl, Phoenix has undergone a dramatic transformation over the last decade. The city’s strong job growth, diversified economy, and influx of remote workers have put upward pressure on housing costs—especially in high-demand neighborhoods. At the same time, Arizona’s relatively landlord-friendly regulations and strong in-migration trends have made it attractive for real estate investors.
Here’s an example from Reddit, which shows some of the moving parts:
Steveinphoenix2017 Hi All- need an advice. I bought a 2008 home in Chandler AZ in early 2020 for a 2.6% interest for 10/1 ARM. But I had to move out of State for a new job. I have bought another home in my new state this year while renting my AZ home. I am trying to decide between keeping the rental or selling it. I get a rent of $2,600 and deducting mortgage, property management fee, taxes & HOA, I have a positive cash flow of $400. Since I have built good equity, does it make sense to sell the home and invest in the stock market or do I keep the rental?
And the sample response from Loud_Ad5283
I would keep it , it's better in the long run. It's call residue income and You're going to want that when retirement comes around. You're making $400 positive monthly. The rental would go up annually to maintain the income. You can write items off against the rental. Ie property manager if you didn't want the hassle of taking care of things, usually it's 8% As you pay down the balance the higher equity you gain. I made the mistake of selling my first house. 4 houses later I see why I should have kept my first house.
If you sell and put it in the market it's a crap shoot unless you're a stock trader. Every time I put it in lose it.
Whole exchange, including some other opinions, here.
Perhaps the clearest signal of Phoenix’s rentvesting moment is the shifting renter demographic. Approximately 7.9% of Phoenix-area renters are wealthy households—those who could afford to buy but opt to rent for flexibility, amenities, or lifestyle. This trend suggests that many are choosing to rent in desirable parts of the metro area while deploying capital into more affordable or higher-yield properties elsewhere in the region, or even out of state.
Phoenix Submarkets: Where Rentvestors Are Looking
Several Phoenix submarkets stand out as hotbeds of rentvesting activity:
Downtown Phoenix: Urban, walkable, and home to many young professionals and students, Downtown offers cultural amenities and new developments. While prices here can be high, demand for rentals is strong making it ideal for those who rent nearby but invest further out.
Arcadia: This upscale neighborhood blends suburban charm with proximity to Scottsdale and downtown. Renters are drawn to its amenities and lifestyle, while investors look elsewhere for better yields.
Tempe: With Arizona State University at its heart, Tempe has a reliable renter base and strong appreciation potential. Some rent in Tempe for its vibrancy, while buying in lower-cost suburbs like Mesa or Chandler.
Scottsdale & Paradise Valley: High-end areas where affluent renters often choose to lease luxury homes while investing in lower-priced properties in more emerging markets.
East Valley (Mesa, Gilbert, Chandler): These suburbs are increasingly popular with investors due to their family-friendly feel, employment centers, and relatively affordable prices. Properties here are often rented out to growing families, while the investor may rent in more lifestyle-centric areas like Central Phoenix.
West Phoenix (Alhambra, Tolleson, Maryvale): These neighborhoods offer lower price points and solid rental yields, especially for investors using BRRRR or value-add strategies. Rentvestors living elsewhere often hold property here for long-term cash flow.
The Future of Rentvesting in the Valley
As Phoenix continues to attract transplants from more expensive metros like San Francisco and Seattle, the tension between lifestyle desires and housing affordability will persist. Rentvesting provides an elegant solution: live where you want, and invest where it makes sense. The availability of new build-to-rent communities, favorable tax treatment for investors, the avoidance/deferral of capital gains taxes, keeping that low mortgage on your ‘old’ property, and a resilient rental market make the Valley a prime candidate for the continued growth of this trend.
Whether motivated by flexibility, financial optimization, or both, rentvesting in Phoenix is no longer a fringe strategy—it’s becoming a mainstream play for a new generation of renters and investors alike.