Your guide to property investment Australia

Property investing is a popular strategy for growing your overall wealth. Our expert guide shows you how to maximise your real estate returns.

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This article was fact-checked and reviewed by , an Accredited Property Investment Adviser and Australian Financial Services Representative with over 25 years' industry experience. Content has been updated for 2021.

If you're keen to start property investing or you're already a landlord and you want to maximise your returns, this guide shares the risks, benefits and tips to make the most out of our real estate investment.

Before deciding to invest in property

Property investing can be a proven and low-risk way to build your wealth, but it carries a certain degree of risk. Before making a property investment purchase, you need to carefully evaluate the benefits and risks to decide whether or not it will be a viable investment for you. By consulting professionals and educating yourself, you can do a self-assessment to identify how much risk you're willing to take on, and look clearly at the risks so you know what lies ahead.

Assess the risk

Property is generally considered to be a less riskier asset compared to other options such as shares, but you still need to evaluate the risk of the investment. When determining the degree of risk, you should conduct a cash-flow analysis with the help of an accountant, property advisor or financial planner. It's important to consider all of the costs of owning an investment property, so you can work out exactly how much you can afford.

Benefits

  • Property prices have historically appreciated over time. Property prices move in a cycle, but the trend has always been up. For this reason, many everyday Australians use real estate to grow their wealth.
  • Rental yields represent a stable and consistent form of secondary income. People will always need housing, and while trends will come and go, if you buy in a central, well-located suburb, you'll always have rental demand.
  • There are tax and depreciation advantages when you invest in property, including negative gearing. This can make the cost of investing in property far more affordable.

Risks

  • Property is not a liquid investment. Your money is tied up if you invest in property, meaning you don't have easy access to it if you need money in a hurry.
  • If interest rates rise, your mortgage repayments will increase.
  • Although relatively stable, property is still subject to market factors that can affect demand, availability and the value of the asset.

How professional advice can boost your chances of success

It's a good idea to consult professionals about your property investing goals. Speak to accountants, property experts, conveyancers, buyer's agents, local real estate agents, financial planners and mortgage brokers to help you decide whether or not the property will represent a valuable investment.

An accountant can help you assess your cashflow and manage the paperwork involved in the property purchase, while a mortgage broker can compare different home loans to ensure that you get a competitive deal to suit your borrowing and investment goals. A solicitor can help you interpret and prepare legal documents before you sign on the dotted line.

You could also consider talking to a buyer's agent or property advisor for advice on purchasing an investment property and how to buy the right types of properties to reach your financial goals.

Learn more about buyer's agents

Doing your research

Immerse yourself within as much information and research as possible. You can leverage resources such as the Australian Bureau of Statistics (ABS), CoreLogic Data, Residex and many other websites that provide property market data and insights which can form the basis of your research during this initial phase.

Develop a property purchase plan and write down all the key decisions you'll have to make throughout the entire process – from identifying your investment strategy to accessing finance, signing the paperwork and screening potential tenants.

What's your investment strategy?

After speaking with an accountant and financial planner, you'll need to form an idea of how you will make profit from the investment.

The most common investment strategies are:

  • Buy and hold. Purchase the property, wait for the value to raise and then sell. Income from rent can cover the mortgage repayments until the property is sold.
  • Renovate and add value. Purchase the property, renovate it to add value to it, and then sell it at a profit.
  • Capital growth. Some investors try to zero in on a property and location that, in the current market, will quickly grow in value. These investors may stick to interest-only investment loans in order to reduce their non-tax deductible costs, and then sell the property after just a few years.

Finding the right property

Finding the right property is perhaps the most important step of all. You need to find a property that matches your investment strategy, appeals to renters and will retain value over time. You'll also need to make sure you're paying a fair price for the property and check that the property is structurally sound.

You will need to make decisions on the following questions:

  • Property type. Will you invest in a unit, a freestanding house or a townhouse?
  • New or established. Some investors prefer buying brand new buildings while others see more value in established dwellings. You can read more on the difference here.
  • Suburb. Your choice of suburb and location has a big impact on your investment. Be sure to look at suburb level data and hit the streets to see for yourself.

More advice on how to research the property market

Capital growth and rental return

Regardless of your strategy, you need to buy a property with some capital growth potential and one that you can rent out. In short, you need to do your numbers to see if the investment actually makes financial sense. You also have to make sure that the return your property generates is comparable to the return you would have made had you invested in another asset class, like shares.

Capital growth

Capital growth represents the increase in a property's value over a period of time and is why most people invest in property. The property market functions in cycles, with periods of growth, stagnation and decline, which have all been part of the Australian property market.

Considering this, it's clear that investing in property should be done for the long-term, rather than expecting a quick return.

Just how much profit can you expect to make over the long-term? This depends on the size and type of property, the location, and the drivers of growth in the local area. A suburb that is land-locked with no more land and a growing population is going to have strong demand and low supply, which puts pressure on property prices. A different suburb that is located in the outer suburbs, where there is more land to be developed and less demand, may have less pressure on property prices.

Rental return

Study the average rental price for similar properties in the area and ask yourself whether the rent you receive will be enough to cover property maintenance costs and still allow you to make a profit.

An important figure is the yield of a property, which you calculate by dividing the rent you receive over a year by the price you paid for the property, which is then multiplied by 100 to get a percentage. For example, if you purchased a property for $500,000 and are renting it out for $500 per week, which is $26,000 per annum, the gross yield would be 5.2% per annum. This figure can then be compared to the yield you would get from investing in shares, for example.

Keep in mind that when you invest in property, you leverage your deposit. You might start with $50,000, but your return of 5.2% is calculated on $500,000, rather than on $50,000, which is more likely to be the amount you would invest in shares.

Getting an investment property mortgage

Ready to get started and apply for an investment loan? Make sure you do the following:

  • Work out how much can you borrow: Before you start comparing different home loans, you need to know how much you can afford to borrow. Enter your details into our borrowing power calculator to work out how much you can afford to borrow.
  • Compare mortgages: Find a suitable investment mortgage with a competitive interest rate. Watch out for high fees too.
  • Get home loan pre-approval: Go to a lender and see if they offer home loan pre-approval, preferably with a credit check so you can shop around. Pre-approval gives you a price range to work with. It's crucial to know how much you can spend before you start looking at different properties and investments.

Final steps

Once you've found a property to purchase and you've started the home loan application you need to take these final steps:

  • Prepare mortgage documents: Speak to your lender to finalise the mortgage documents.
  • Hire a surveyor: A quantity surveyor can help maximise the tax deduction you get from the property.
  • Landlord responsibilities: If you want to put tenants in your investment property, read about your rights and responsibilities as a landlord and how to advertise correctly.
  • Appraisal: Get an independent appraisal of the property. Pest and building inspections are also a smart move. A conveyancer should also check the boundaries of the property if the investment is anything larger than an apartment.

Minimising your risks

PropertyInvestmentRisks

Savvy investors actively take steps to minimise their property investment risk, such as diversifying their property portfolio.

Here are some common ways to reduce your investment risk:

  • Cash buffer: Ensure you have a contingency buffer of funds to ensure that you can cover any unforeseen expenses that may arise in future (e.g. during untenanted periods).
  • Split or fixed rate loan: As many of the 'Big Four' have recently increased their variable mortgage rates you may want to consider splitting your loan or opting for a fixed rate loan so you have peace of mind in knowing exactly what your repayments will be each month.
  • Invest in different areas: As mentioned above, a good way to minimise your investment risk is not to 'put your eggs in one basket.' If possible, invest in different property types across a number of different regions to ensure that if there is an economic downturn, you will not be adversely affected.
  • Market research: Another way to lessen your investment risk is to undertake extensive market research into the market you're investing in. For instance, you may want to consider the supply and demand factors for the market, the average rental yield for similar properties, and check with local council to see whether any infrastructure projects are in the pipeline which could affect the demand and availability of property in the region.

Ready to invest? Compare finance options

$
years
Name Product Interest Rate (p.a.) Comp. Rate (p.a.) Fees Monthly Payment

Nano Variable Home Loans P&IInvestment≥ 25% Deposit Refi Only

Nano Variable Home Loans
2.29%
2.29%
  • App: $0
  • Ongoing: $0 p.a.
$578
Investors can refinance this no-fee variable rate loan. You will need a 25% deposit. Fast online approval.

Athena Variable Home Loan P&IInvestment≥ 40% Deposit

Athena Variable Home  Loan
2.39%
2.39%
  • App: $0
  • Ongoing: $0 p.a.
$586
Investors with large 40% deposits or equity can get this low variable rate. A competitive option for investors looking to refinance.

UBank UHomeLoan Fixed P&IInvestment 1Y Fixed≥ 20% Deposit

UBank UHomeLoan Fixed
2.14%
2.54%
  • App: $0
  • Ongoing: $0 p.a.
$567
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender.

St.George Fixed Rate Advantage Package P&IInvestment 2Y Fixed≥ 20% Deposit

St.George Fixed Rate Advantage Package
2.24%
3.89%
  • App: $0
  • Ongoing: $395 p.a.
$574
$3,000 refinance cashback.
Investors can lock in a competitive rate for two years with this package loan. You will need at least a 20% deposit. Refinancers borrowing $250,000 or more can get a $3,000 cashback (Apply by 30 September 2021. Terms and conditions apply). Refinancers Only.

Westpac Fixed Option Home Loan Premier Advantage Package P&IInvestment 2Y Fixed≥ 5% Deposit

Westpac Fixed Option Home Loan Premier Advantage Package
2.29%
3.97%
  • App: $0
  • Ongoing: $395 p.a.
$578
$3,000 refinance cashback
A competitive fixed rate loan for investors that allows you to make up to $30,000 in extra repayments. Principal and interest loans only. $3,000 cashback for eligible refinancers. Apply by 30 September 2021. Terms and conditions apply.

Bank of Melbourne Advantage Package Fixed Home Loan P&IInvestment 2Y Fixed≥ 20% Deposit

Bank of Melbourne Advantage Package Fixed Home Loan
2.24%
3.91%
  • App: $0
  • Ongoing: $395 p.a.
$574
$3,000 refinance cashback.
Lock in a low rate for two years with this competitive investment package loan. Refinancers borrowing $250,000 or more can get a $3,000 cashback (Apply by 30 September 2021. Terms and conditions apply). Refinancers Only.

loans.com.au Smart Booster Discount Investor Variable Home Loan P&IInvestment≥ 20% Deposit

loans.com.au Smart Booster Discount Investor Variable Home Loan
1.99%
2.71%
  • App: $0
  • Ongoing: $0 p.a.
$555
If you have an owner occupier loan with loans.com.au you can also get this very low rate variable mortgage for your investment property. Principal and interest repayments. Add an offset account for an additional 0.10% on your interest rate. Get your loan processed fast and settle within 30 days.

Nano Variable Home Loans IOInvestment≥ 25% Deposit Refi Only

Nano Variable Home Loans
2.59%
2.40%
  • App: $0
  • Ongoing: $0 p.a.
$601
This variable investment loan has interest-only repayments and is for refinancers only. Fast online approval. Requires a 25% deposit.

Well Home Loans Balanced Fixed Home Loan P&IInvestment 3Y Fixed≥ 10% Deposit

Well Home Loans Balanced Fixed Home Loan
2.34%
2.36%
  • App: $250
  • Ongoing: $0 p.a.
$582
A competitive 3 year investor rate with principal and interest repayments. Optional offset account with a $10 monthly fee. Not available for construction purposes.

homeloans.com.au Low Rate Home Loan with Offset IOInvestment≥ 40% Deposit

homeloans.com.au Low Rate Home Loan with Offset
2.59%
2.42%
  • App: $0
  • Ongoing: $0 p.a.
$601
This competitive variable rate loan is for investors who want interest-only repayments. You will need a 40% deposit.

HSBC Home Value Loan P&IInvestment≥ 30% Deposit

HSBC Home Value Loan
2.44%
2.45%
  • App: $0
  • Ongoing: $0 p.a.
$590
$3,288 refinance cashback offer
This variable rate loan is available for property investors with 30% deposits. This loan has very few fees. Eligible refinancers borrowing $250,000 or more can get a $3,288 cashback. Terms and conditions apply.

UBank UHomeLoan Variable Rate P&IInvestment≥ 20% Deposit

UBank UHomeLoan Variable Rate
2.55%
2.55%
  • App: $0
  • Ongoing: $0 p.a.
$598
Get a discounted, low-fee investor loan from a convenient online lender. 20% deposit required.

Suncorp Home Package Plus Fixed P&IInvestment 3Y Fixed≥ 20% Deposit

Suncorp Home Package Plus Fixed
2.28%
3.15%
  • App: $0
  • Ongoing: $0 p.a.
$577
$3,000 refinance cash bonus
Borrowers with 20% deposits can lock in a low fixed rate loan for three years. Eligible new borrowers can get the annual package fee reimbursed for the life of the loan. $3,000 refinance cash bonus for eligible borrowers. Other terms, conditions and eligibility criteria apply.

homeloans.com.au Low Rate Home Loan with Offset P&IInvestment≥ 20% Deposit

homeloans.com.au Low Rate Home Loan with Offset
2.39%
2.41%
  • App: $0
  • Ongoing: $0 p.a.
$586
This investment loan keeps fees low, has a sharp interest rate and comes with a 100% offset account. This loan is not available for construction.

Athena Variable Home Loan P&IInvestment≥ 20% Deposit

Athena Variable Home  Loan
2.59%
2.48%
  • App: $0
  • Ongoing: $0 p.a.
$601
A competitive investor variable rate that falls as you build equity.

UBank UHomeLoan Fixed IOInvestment 3Y Fixed≥ 20% Deposit

UBank UHomeLoan Fixed
2.24%
2.50%
  • App: $0
  • Ongoing: $0 p.a.
$574
Pay no ongoing fees on this investment loan fixed for 3 years.

Well Home Loans Balanced Variable P&IInvestment≥ 20% Deposit

Well Home Loans Balanced Variable
2.32%
2.35%
  • App: $250
  • Ongoing: $0 p.a.
$580
If you're an investor with a 20% deposit saved you can get this low rate mortgage. Not available for construction.

UBank UHomeLoan Fixed P&IInvestment 5Y Fixed≥ 20% Deposit

UBank UHomeLoan Fixed
2.54%
2.57%
  • App: $0
  • Ongoing: $0 p.a.
$597
Lock in a 5 year fixed rate on your investment loan and pay no ongoing fees.

Athena Variable Home Loan P&IInvestment≥ 30% Deposit

Athena Variable Home  Loan
2.49%
2.43%
  • App: $0
  • Ongoing: $0 p.a.
$594
Athena's refinance offer for investors and owner occupiers.

UBank UHomeLoan Variable Rate IOInvestment≥ 20% Deposit

UBank UHomeLoan Variable Rate
2.60%
2.58%
  • App: $0
  • Ongoing: $0 p.a.
$602
Pay interest only repayments with this special offer for investors.

IMB Fixed Rate Home Loan P&IInvestment 3Y Fixed≥ 10% Deposit

IMB Fixed Rate Home Loan
2.35%
3.33%
  • App: $449
  • Ongoing: $6 per month
$583
NSW and ACT customers only. A 3 years fixed rate investor which allows extra repayments to be made.

Well Home Loans Balanced Variable P&IInvestment≥ 10% Deposit

Well Home Loans Balanced Variable
2.87%
2.90%
  • App: $250
  • Ongoing: $0 p.a.
$624
Competitive variable investor mortgage to fund your property portfolio. You can add a 100% offset account for just $10 a month.Not available for construction purposes.

UBank UHomeLoan Fixed IOInvestment 1Y Fixed≥ 20% Deposit

UBank UHomeLoan Fixed
2.29%
2.55%
  • App: $0
  • Ongoing: $0 p.a.
$578
Investors can enjoy flexible repayments and an easy application process with this pioneering online lender.

Athena Variable Home Loan IOInvestment≥ 30% Deposit

Athena Variable Home  Loan
2.69%
2.52%
  • App: $0
  • Ongoing: $0 p.a.
$609
Investors with 30% deposits can get this fee-free variable rate loan. This loan has interest-only repayments.

homeloans.com.au Low Rate Home Loan with Offset IOInvestment≥ 20% Deposit

homeloans.com.au Low Rate Home Loan with Offset
2.69%
2.52%
  • App: $0
  • Ongoing: $0 p.a.
$609
A competitive rate with no application or ongoing fee. This loan is not available for construction.
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12 Responses

    Default Gravatar
    GenApril 28, 2017

    What are my financing options with a Skilled Migrant Visa? I understand the FIRB stipulation but wonder how to organize a mortgage as a US citizen. I’d like to purchase in QLD since my visa term is 5yrs. I do plan to eventually become an AU citizen. Thanks!! :D

      Avatarfinder Customer Care
      DeeMay 4, 2017Staff

      Hi Gen,

      Thanks for your question.

      The home loan options being offered to temporary Australian residents are typical mortgage packages that would be available to Australian citizens or permanent residents. The main difference being the cap on the amount you are allowed to borrow and the down payment that is required. Depending on your job circumstances you may be able to qualify for up to 90% of the value of the property.

      You may compare your home loan options on our website for more details.

      Consider as well seeking the help of a mortgage broker. A mortgage broker is a professional who compares and helps you apply for home loans on your behalf. A good mortgage broker will give you personalized service all the way through to settlement.

      I hope this helps.

      Cheers,
      Anndy

    Default Gravatar
    hilMarch 29, 2016

    Is it possible to buy investment property and lease back to myself

      Default Gravatar
      BelindaMarch 30, 2016

      Hi Hil,

      Thanks for reaching out.

      I’ve sent you an email to follow up with this enquiry.

      Thanks,
      Belinda

    Default Gravatar
    HermanJanuary 9, 2016

    Why are lending institutions reluctant or are outright against lending for properties relating to student accommodation properties when the return is approximately 10% p/a near Bond university? There the students keep their accommodation as they do not have long periods between semesters.

      Avatarfinder Customer Care
      MarcJanuary 11, 2016Staff

      Hi Herman,
      thanks for the question.

      Unfortunately lenders keep their lending criteria under wraps for the most part, but generally speaking some lenders view student accommodation as more of a risk because of its more limited usage when compared to a regular property. As always there are exceptions to this rule, so it’s always a good idea to speak to a mortgage broker, or at least approach more than one lender to see if you would be eligible for a loan.

      I hope this helps,
      Marc.

    Default Gravatar
    IreneAugust 19, 2014

    Is it always a bad idea to go with an investment property group to do everything for you?
    (eg. IPGA )

      Avatarfinder Customer Care
      MarcAugust 20, 2014Staff

      Hi Irene,
      thanks for the question.

      This depends on a range of factors. Using an investment property group which is reputable and proven to deliver results can be a good way to enter in the market if you’re unsure of the process and not confident purchasing a property yourself. I’d recommend contacting a qualified financial advisor before joining any investment property group.

      I hope this helps,
      Marc.

    Default Gravatar
    VivienJune 25, 2014

    Hi, can you tell me what is required to add your partner name to a title deed. Thank you Vivien

      Avatarfinder Customer Care
      ElizabethJune 26, 2014Staff

      Hi Vivien,

      Thanks for your question.

      The process and the documents needed for adding a partner’s name to your property title differs in each state and territory. You can find the relevant government websites and forms from our guide.

      You should also consider speaking to a conveyancer who will give expert and practical advice on what to do at every step of the process.

      Cheers,
      Elizabeth

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