Rentvesting: Everything you need to know in Bundoora

Rentvesting gives you a way to enter the property market without locking yourself into a location you might not want to live in long term.

The approach is particularly relevant in Bundoora, where median purchase values sit around $905,000 for houses and $520,000 for units, while rental demand remains consistently strong due to the presence of La Trobe University and RMIT campuses nearby. Many buyers rent in inner suburbs closer to work or lifestyle amenities and purchase investment property in areas with stronger yields and lower entry costs.

Why Rentvesting Makes Sense in Bundoora

Bundoora's rental market absorbs tenant demand year-round. Units deliver a gross yield of 5.10 per cent, which is well above Melbourne's metro average. Houses return 3.38 per cent. Median weekly rent sits at $530 for units and $600 for houses, based on CoreLogic data to June 2026.

Consider a buyer who works in the CBD and values walkable access to cafes, tram stops and nightlife. Renting a two-bedroom apartment in Richmond or Fitzroy might cost $650 per week, but purchasing in those suburbs requires a significantly higher deposit and brings lower rental yields if the property is later tenanted. Instead, that buyer could purchase a two-bedroom unit in Bundoora for around the suburb's median, lease it to a postgraduate student or young professional, and use the rental income to offset part of the mortgage while continuing to rent closer to the city.

The financial outcome depends on whether the rent you pay exceeds the gap between your investment loan repayment and the rent you collect. In Bundoora's case, the unit yield is high enough that the shortfall remains manageable, particularly when structured as interest-only in the early years.

What Changed for Investment Loans from Mid-2026

From 12 May 2026, new legislation altered how losses on investment properties are treated for tax purposes. If you purchased an established investment property after that date, losses from that property can only be offset against income from other residential properties, not against your salary. Losses can still be carried forward and used in future years when the property generates a gain or positive income.

Properties purchased before that date, and properties classified as eligible new builds, remain fully negatively geared under the old rules. For a Bundoora unit purchased as an off-the-plan apartment or newly constructed townhouse after 12 May 2026, you retain the ability to offset losses against wage income, which improves cash flow during the holding period.

Capital gains tax treatment also shifted from 1 July 2027. For gains that accrue after that date, the 50 per cent discount is replaced by cost base indexation and a 30 per cent minimum tax rate on real gains. Properties owned before 1 July 2027 are taxed under the old rules for the portion of the gain that accrued before that date, and under the new rules for the portion after. Eligible new builds allow you to choose between the old discount and the new indexed method when you sell, whichever delivers the lower tax.

These changes mean the structure of your investment loan and the timing of your purchase now carry more weight than they did 12 months ago. Borrowers purchasing established property in Bundoora after May 2026 need other residential property income or a longer investment horizon to absorb quarantined losses.

How Lenders Assess Rentvesting Scenarios

When you apply for an investment loan while renting, the lender includes both your current rent and your proposed investment property holding costs in the serviceability calculation. You do not receive an offset for the rent you currently pay just because you are buying an investment property instead of a home.

Lenders apply a serviceability buffer of 3.0 percentage points above the loan product rate and assess whether you can service the loan at that higher rate. They will also apply a rental income shading factor, typically 80 per cent, meaning only 80 per cent of the expected rent is counted as income. For a Bundoora unit renting at $530 per week, the lender includes $424 per week as usable income in the assessment.

Debt-to-income limits activated from February 2026 mean lenders can only write up to 20 per cent of new investor loans to borrowers with total debt six times their income or higher. If your income is $100,000 and you are seeking a loan above $600,000, you fall into a restricted pool. Not all lenders handle that restriction the same way. Some have tightened credit policy across the board rather than manage the limit transactionally. Others remain more flexible for borrowers with strong savings history and low living expenses.

In Bundoora, a $520,000 unit purchase at 90 per cent loan-to-value ratio requires a $52,000 deposit plus stamp duty and costs, bringing the total upfront requirement to around $78,000. Lenders Mortgage Insurance applies above 80 per cent LVR and is calculated on a sliding scale, adding between $15,000 and $18,000 to the amount borrowed in this scenario. That premium can be capitalised into the loan rather than paid upfront, but it increases your ongoing repayment and total interest cost.

Interest-Only Versus Principal-and-Interest Structures

Investment loans can be written on an interest-only basis for up to five years, after which they revert to principal and interest unless you apply to extend the interest-only period. Interest-only repayments reduce your monthly outgoing, which improves cash flow if you are also paying rent elsewhere.

For a $468,000 loan at a variable rate around current levels, an interest-only repayment would sit near $2,340 per month. A principal-and-interest repayment on the same loan over 30 years would be closer to $2,820 per month. The $480 difference matters when you are also paying $650 per week in rent in an inner suburb.

Interest-only loans attract higher risk weighting under the prudential standard APS 112, which can result in a slightly higher interest rate compared to principal-and-interest loans at the same LVR. The rate difference is typically between 10 and 30 basis points depending on the lender. Some lenders also apply a higher serviceability loading to interest-only applications.

Over a five-year interest-only period, you do not reduce the loan balance, which means you pay more total interest across the life of the loan compared to a principal-and-interest structure from day one. The trade-off is monthly flexibility. If your income increases or your circumstances change, you can make lump sum reductions or switch to principal and interest earlier than the reversion date.

Vacancy Rates and Tenant Demand in Bundoora

Bundoora's proximity to La Trobe University's Bundoora campus and the RMIT Bundoora East campus sustains year-round rental demand. Student tenants, early-career professionals and hospital staff from the nearby Northern Hospital all contribute to the tenant pool. The vacancy rate across metropolitan Melbourne sat at 1.3 per cent in July 2026, and Bundoora experiences similar tightness due to limited new unit supply relative to enrollment numbers at both campuses.

Tenant turnover tends to align with the academic calendar. Leases signed in late January or early February capture students arriving for semester one. Mid-year turnover is less predictable but often involves young professionals relocating for work. Investors who purchase near public transport nodes, particularly around Bundoora railway station on the Hurstbridge line or along Plenty Road, tend to experience shorter vacancy periods between leases.

Body corporate fees apply to units and typically range from $800 to $1,400 per quarter depending on the age of the building and the facilities provided. Older walk-up blocks without lifts or shared amenities sit at the lower end. Newer complexes with gyms, secure parking and concierge services sit at the higher end. These fees are fully deductible as ongoing holding costs but must be included in your cash flow calculation when assessing whether the rental income covers your expenses.

Refinancing and Equity Release for Portfolio Growth

Once your Bundoora property increases in value, you can access that equity to fund a deposit on a second property without selling the first. Lenders will lend up to 80 per cent of the current value without requiring Lenders Mortgage Insurance, meaning any appreciation above your original purchase price becomes accessible equity once you have paid down part of the loan or the market has moved.

As an example, if you purchased a unit for $520,000 and the value rose to $585,000 over four years, the equity available at 80 per cent LVR would be $468,000 minus your remaining loan balance. If you had been paying principal and interest and reduced the loan to $445,000, you could access up to $23,000 in usable equity. If the loan remained interest-only at $468,000, no equity would be available at that LVR without triggering LMI.

Refinancing to release equity allows you to expand your property portfolio while keeping your original investment property tenanted and generating income. The released equity can be used as a deposit for a second purchase, whether that is another investment property or an owner-occupied home if your circumstances have changed. Lenders assess the refinance application as a new loan and apply current serviceability standards, including the 3.0 percentage point buffer and debt-to-income limits, so your income and total debt position at the time of refinance will determine how much you can access.

Rentvesting works when the rental income from your investment property, combined with your ongoing savings capacity, allows you to hold the asset long enough for capital growth to build accessible equity. Bundoora's combination of consistent tenant demand, moderate entry price and above-average unit yield makes it a practical choice for buyers who want to enter the market without relocating from the inner suburbs they currently rent in.

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