Guide: Buying Investment Property in Australia


More than 2 million Australians own an investment property.

The chances are, you’ve been thinking of dipping your toe into the real estate world for some time. Yet, you may lack the confidence or knowledge to take action.

Many people often feel overwhelmed by the process, so they give up before they’ve even started. Despite the fact that property can be a lucrative investment when chosen wisely.

It might be helpful to know that the process can be rather straightforward. Read our helpful guide to buying investment property in Australia.

Review Your Finances

Budgeting is anything but fun, but it’s definitely necessary when buying investment property.

Know your numbers before you decide to buy. You can then identify exactly how much you have when buying investment property.

It will ensure you can balance your income against your expenses. Not only that, but it will help you to identify where your money is going and where you can make cuts to fund your goal.

Don’t make the mistake of assuming you can’t afford to invest in a property. If you have a well-paid, stable job and a solid employment history, it should be easy to receive a loan.

Once you have identified your budget, you can then start looking for a property to suit your finances.

The Pre-approval Process

You have the option to receive pre-approval via a lender or trusted mortgage broker. Many people often turn to a broker first if they are unsure whether they have the credit to invest.

Don’t make the big mistake of applying for many pre-approvals. Every time you apply, a lender will review your credit record.

Many inquiries will send a red flag to the lender, and they may reject an application, as a result.

Define Goals When Buying Investment Property

Most property investors tend to set goals when buying investment property. For instance, do you want to secure your financial future? Or do you want to do whatever you want, whenever you want to do it?

A defined goal will more than likely determine the property you choose. You should also set a deadline for when you want to reach your goals.

For example, if you want to retire in 10 years, you must make a 10-year plan. This means creating a 5-yearly, yearly and weekly financial action plan. Buying investment property will then feel less daunting.

Assess the Risk

Even the most experienced property investor will have a risk profile. Your real estate attitude and finances will determine your success in the industry.

Create an investment plan that complements your risk profile. This will allow you to deal with the pressures of buying investment property. With a plan in place, you will sleep a lot better each night.

Pick the Best Mortgage

The mortgage you pick will determine your financial future, so choose wisely.

Many people spend time researching options to shave a few dollars off a mortgage each month. However, researching the real estate market will provide a greater return.

It’s also vital to mention that loan interest is tax deductible. Yet, borrowing costs are often not. For this reason, consult a financial advisor to correctly structure a loan.

You will also have to choose a variable rate loan or a fixed rate loan. Don’t rush into a decision and weigh up the pros and cons of both. For instance, variable rates are often cheaper, but a fixed rate loan could suit your finances.

It might be a smart decision to opt for an Interest Only loan, over Principal and Interest. That’s because it can improve the investment’s tax effectiveness.

Stamp Duty

You may not realize it, but most Australian property investors have to pay tax upfront. This is known as stamp duty.

If you don’t know what stamp duty is, you may be shocked to find you have to pay tens of thousands on top of a deposit.

The tax amount you have to pay will depend on your state.

Annual Land Tax

It’s not only stamp duty you’ll need to pay. The state government also requires a property owner to pay an annual land tax. This will be introduced once your holdings are substantial.

Again, the tax will vary by the state and territories. Ensure you review the tax details before buying investment property.

Discover the Best Locations

Most high-value investments are often located in Australia’s largest cities. Think Sydney, Melbourne, Brisbane, and Perth.

The best apartment locations are usually found in the suburbs. If you’re wanting to invest in a house, you would be wise to move a little bit further out.

There’s also a large market value for a property near schools, parks, and public transport.

Don’t forget to take a look at the areas crime rates, which can influence a tenant’s decision to rent a property.

Know the Market

It’s vital to have a good understanding of the real estate market before you make an investment. It can raise awareness of get-rich-quick schemes, which will ensure you don’t make a big mistake.

For instance, if someone promises an overnight success, walk away from the opportunity. No one can make real estate guarantees.

You’re Never Too Young

Many young adults may have excellent real estate knowledge but are too scared to take the plunge.

Yet, most landlords aged between 18 to 35 years old own an average of two properties. This is proof that it is never too early to start buying investment property.

Get Advice

Buying investment property is a big decision, so you’re bound to be a little cautious. Yet, the returns can be lucrative if you do your homework.

Don’t close the door on an opportunity. Seek advice from a specialist who can help you climb the property ladder.

At Vystal Property Group, our property experts can help you on your real estate journey. Our advice will be applicable to your individual circumstances and investment.

With our help, you may receive the best possible return on your investment in a hassle-free manner.

For a free property investment guide, fill in your details on the resource form on our homepage.