Tips When Investing In Australian Property

There’s no doubt that Australian property is a sound investment. With continued growth and stability, it’s one of the most reliable options available. If you’re thinking of investing in Australian property, here are a few tips to help you get started. 

First, do your research. Property values can vary greatly from state to state, so it’s important to understand the market before you invest. 

Second, establish a budget and stick to it. Investing in property can be expensive, so make sure you have enough money saved up to cover your costs.

Finally, be prepared for some risks. Property investments aren’t always guaranteed to pay off – there’s always the possibility of losing money if things go wrong. 

When it comes to investing, there are a lot of choices out there. But if you’re looking for a smart and profitable investment, Australian property is a great option.

Here are a few tips to help you get started. First, do your research and find out what kind of properties are in demand in the area you’re targeting.

Next, be prepared to invest for the long term – Australian property values have been increasing steadily over the years. 

Finally, consult with a local real estate agent who can guide you through the process and help you find the right property for your needs. With these tips in mind, investing in Australian property is sure to be a profitable experience!

Putting Money Into Australian Real Estate

Putting money into real estate is consistently ranked as one of the most popular ways for people in Australia to acquire wealth. Having said that, considering the fact that it is a long-term commitment, not everyone should do it.

Take into account the aforementioned positives and negatives while deciding whether or not this is the best course of action for you.

Think About Your Options

Have you given any thought to remodelling the house you are now living in, or to asking for an additional home loan so that you can convert it into an investment property?

The several advantages of investing in real estate:

  • A long-term investment in real estate is one that is relatively secure.
  • It is a valuable and reliable asset.
  • Rental income from an investment property may be sufficient to meet the monthly payments on any mortgage as well as any other costs.
  • You will be eligible for capital gains if you decide to sell it at a later time.
  • Increasing the amount of equity in your investment. Mortgage financing gives you the ability to diversify your holdings and grow your portfolio.
  • It is possible for this to result in additional financial gains via taxation and gearing.
  • The expenses that are related to the investment property can be deducted from the rent that is collected, and you may be able to claim depreciation on assets such as the furniture, carpeting, and white goods in the property.
  • If you have other investments in your portfolio, such as cash, shares, or managed funds, investing in property may be a great method to diversify your holdings and lower the risk associated with them.

Recognising The Risks

There is a possibility of loss, just as there is with any other investment. It’s possible that the revenue from rent won’t live up to your expectations, or that the value of the property will go down.

It’s possible that you won’t have immediate access to your funds, but you could make far more money with a different kind of investment.

Have a conversation with an expert in the field of lending to determine whether or not the purchase of an investment property is a good idea for you.

Have You Considered Your Financial Capability?

You’ve recently bought your first home and have been making payments on the mortgage for some time; in the meantime, the value of your home has increased.

As a consequence of this, you are experiencing a greater sense of financial ease, and you are beginning to consider whether or not you might be able to afford an investment property.

Finding the answer to this question will bring up a number of fascinating aspects that will assist you in determining whether or not this strategy is appropriate for you.

From The Angle Of Financial Strategy

For many people, determining whether or not they can afford to buy an investment property will first need them to organise their priorities and decide what is most important to them.

  • Why do I wish to make a purchase of a property to use for investment purposes?
  • Where does this fall inside my overall plan for my long-term finances?
  • Which kind of investment property am I looking for: one that comes in high rental yields or one that I can sell for a profit in five or 10 years?
  • Do I want to renovate the property in order to increase its worth, or do I want a property where I can instantly introduce tenants?
  • Should I look into purchasing an apartment or a house?
  • What kind of an interest rate will I get on the mortgage for my investment property?

You will be able to build a strategy with the assistance of all of these questions, which will bring you closer to the answer of whether or not you can afford the type of investment property that is compatible with your long-term plan.

From a Point of View That Is More Practical


If you make the decision to become an investor in real estate, the following is a list of the costs that you need to be aware of:


A down payment equal to twenty percent of the total value of the property is typically required in order to avoid having to pay for lenders mortgage insurance (LMI).

Do some research and shop around for the best loan terms; you might be able to get a mortgage with a loan-to-value ratio (LVR) as high as 95%, which would imply that you would require a smaller initial deposit.

Home loan

There are additional fees that are associated with your loan, in addition to the main amount that you are responsible for repaying.

For instance, there are charges associated with establishing a business and submitting an application, as well as legal fees, valuation fees, and monthly or annual fees.

If you have a deposit that is less than 20% of the total amount you wish to borrow, LMI can be an expensive charge for you, and then there are the continuous interest repayments on the amount that you wish to borrow.

Before you sign up for a house loan, it is important that you read the tiny print because there may be a variety of additional costs that apply.

Purchase costs

You will need to take into consideration the additional fees that come along with the purchase. This includes the stamp duty fee, which varies from state to state and is calculated based on the value of the property.

A legal transfer of ownership can cost anywhere from $650 to $850, depending on the state, and there are also fees associated with registration and the cost of hiring a lawyer or a conveyancer.

Building and pest inspections will both need to be performed before the sale of the property can be finalised, which might add an additional $500 to $1,000 to your overall costs. The cost of title searches is yet another additional expense.

Buyer’s agent fees

A growing number of investors are turning to buyer’s agents for assistance in locating and purchasing the ideal property for their portfolios.

If you decide to proceed in this manner, you will need to include the commision that your agent will receive in your calculations.

As a rule, buyer’s agents will either charge a commision that is between 1% and 2% of the purchase price of the property, or they will charge a flat fee that ranges between around $5,000 and $15,000.


Your investment property can be protected from hazards such as fire, storms, theft, and other threats by purchasing building insurance.

On the other hand, Landlord Insurance protects you financially in the event that tenants cause damage to your property or fail to pay their rent.

The cost of providing this kind of protection is determined by a number of different elements. These considerations include the size of your property, the type of material utilised in its construction, and the location of the land.

Property management fees 

You can handle the management of your investment property on your own if you have the necessary skills and time, but the vast majority of people decide to hire a qualified property manager to handle the care of their investment property.

Property managers are responsible for a variety of responsibilities, including the search for and screening of prospective renters, the organisation of open houses, and the management of any necessary repairs or maintenance activities.

Property management costs often account for somewhere between seven and ten percent of monthly rent payments.

Repairs and maintenance

It’s possible that your home will require maintenance at some point.

Because of the ordinary wear and tear that occurs over time, faucets will develop leaks, fittings and fixtures will eventually need to be changed, and other aspects of the home or apartment will simply stop functioning.

You need to be ready to pay for any necessary maintenance and repairs that may arise at the property. You are responsible for covering those costs.

To keep your house in pristine condition, you might need to hire professionals in a wide variety of crafts, such as plumbing, electrical work, construction, and others.

Newer properties typically have cheaper repair and maintenance costs than older ones due to the decreased likelihood that their components may become defective.

Strata fees

You will be required to make recurring payments to the body corporate if you purchase a townhouse or apartment.

These fees cover the cost of building insurance as well as the expenses connected with maintaining common areas, and the amount that they cost might vary based on the size and kind of the building, as well as the location and characteristics of the structure.

Before you make the decision to purchase a home, it is imperative that you investigate the strata fees that you will be obligated to pay.

Council rates

Inquire with the city council about the average quarterly rates that are charged in the neighbourhood for properties that are roughly the same size as yours.

After that, incorporate this sum into your financial plan so that you can more accurately estimate the prospective return on your investment.

Additional expenses. Depending on the specifics of your situation, the following are some examples of additional fees you might need to factor in:

  • Costs charged by an accountant to assist you in calculating your rental income and expenses for the purpose of completing your tax return
  • Pest control costs
  • Expenses that are incurred when a tenant vacates a rental unit and a replacement must be found.
  • Expenses associated with conducting renovations on your property in the event that it is in need of such work in order to improve its “liveability” and hence boost its appeal to potential tenants
  • In the event that you need to travel to check your property or supervise maintenance, we will cover your travel and lodging fees.
  • Your investment property is subject to land tax, which must be paid to the government.
  • The amount that your tenants will have to pay to have all of their utilities and services connected to your property
  • Agents’ fees, legal fees, advertising charges, and any other costs incurred to keep the property in pristine condition are all included in these costs.

Advice For New Real Estate Investors

Here are some important things to think about no matter what age you are if you are considering investing in the real estate market in Australia.

If you’ve been putting money down for a long time and think you’re ready to buy your first investment property, it’s crucial to make sure you’re aware of a few key details so that you can make an educated choice.

This will allow you to maximise your return on the investment.

Keep in mind that the values of homes are subject to wild fluctuations that can happen with little to no warning.

Keep in mind that property prices can go up but they can also go down, which means that depending on how long you bear hold of the property, you could end up breaking even or even incurring a loss.

Although property values can go up, it is important to keep in mind that they can also go down.

Have You Created a Spending Plan That Is Appropriate For Your Means?

Depending on the sum that you’ve put aside as a down payment, you could be looking at a loan term of between 25 or 30 years for your investment property.

And because this can be one of the largest loans you’ll ever incur, it’s crucial to prioritise any other financial goals you might have before getting involved in anything else.

If you currently own a piece of real estate, you may be able to use the equity that you have built up in that property to obtain extra financing from your existing lender.

Check out some of the advantages and disadvantages that are discussed in our post on increasing the equity in your house and using it to make investments.

In the meanwhile, here is a rundown of some of the up-front and continuing fees that could potentially apply to you.

Upfront costs

  • Deposit (generally around 10% to 20% of the purchase price) unless you’re paying outright
  • Loan application fee (a one-off payment to your lender covering basic admin)
  • Lender’s mortgage insurance (which you may need if your deposit is less than 20%)
  • Government charges (stamp duty, mortgage registration and transfer fees)
  • Legal and conveyancing costs (which will vary depending on the solicitor or conveyancer)
  • Building, pest and strata inspection fees.

Ongoing costs

  • Loan repayments and interest charges
  • Strata fees (for communal properties)
  • Council rates insurance (for the building, contents and you as a landlord)
  • Repairs and maintenance costs
  • Property management fees
  • Vacancy costs if you don’t have tenants for a period of time
  • Other charges, such as land tax.

Have You Recently Examined the Contents of Your Credit Report?

If you have a credit card, a mobile phone plan, or an account with a utility company, there is a good chance that a credit reporting agency has a file with your name on it.

Credit reporting agencies are given information about you by creditors, and creditors then use this information to decide whether or not they will lend to you.

Keeping this in mind, before you start looking at different houses, you should make it a point to examine your credit history. If your credit report has any negative marks on it, it may be more difficult for you to get approved for a loan.

Have You Thought About What And Where To Shop?

Whatever you choose to do in this situation will have an effect, both immediate and long-term, on the amount of money you can make.

When you are doing your research, some of the things that you should look at are as follows:

  • What prices are homes going for in the neighbourhoods you’re considering moving to?
  • Whether or not these suburbs have the potential for price growth
  • In the event that there are planned projects in the area that could have an impact on the prices
  • Whether or not you’ll be required to make improvements, and whether or not you have the additional finances to do so.
  • What kind of returns on average rentals may be expected and what the vacancy rates are like in these places
  • Whether or not there are convenient amenities like schools, stores, and public transportation in the area.

Have You Given Any Thought To Who Will Be In Charge Of Managing The Property?

You should seriously consider hiring a property manager if you don’t have a lot of free time or if your investment property is located a significant distance away from where you live.

Take into consideration that this will set you back somewhere in the range of 7–10% of your total weekly rental income. A property manager is responsible for a variety of responsibilities, including the following:

  • Public relations for the real estate
  • The examination of prospective occupants as tenants
  • Reports on the status of the property taken both before and after routine inspections
  • When and how exactly rent is paid by renters
  • Concerns regarding upkeep and repairs
  • Cealing with customer concerns and evictions.

Are You Up to Date on Your Legal Duties?

Even while property managers are able to assist in a variety of areas, it is still your responsibility as a landlord to be aware of all of your legal responsibilities.

Before, during, and after a tenancy, landlords are held accountable for a variety of different tasks. The condition of the investment property in Australia can have an effect on these, therefore they are not always the same.

Check out the website of the state government or the department of fair trading in the state in which your investment property is located for further information.

Have You Looked Into Possibilities For Tax Deductions?

When you own an investment property, you may be eligible to claim a tax deduction for a range of expenses incurred in connection with the property during the time that it is rented out, or available for rent, depending on the circumstances.

The following are some examples of such items, however the list is not exhaustive:

  • The costs of advertising
  • Costs associated with property management
  • Expenses related to borrowing money, including interest charges and fees for loans
  • Rates paid to the local council, property taxes, and strata fees
  • Depreciation of the building as well as the gradual loss of value that occurs over time in the various fittings and fixtures, such as carpets, stoves, and hot water systems
  • Costs associated with mending, maintaining, pest treatment, cleaning, and gardening
  • Insurance for buildings and property owners
  • Expenses for the phone and stationery
  • Costs associated with accounting and bookkeeping

Note that in Australia, travel expenses incurred for the purpose of inspecting a property are normally not considered a claimable expense. On the other hand, check the ATO website for additional deductions you might be eligible for.

Are There Any Additional Tax Implications?

How negative gearing can reduce what you pay in income tax

Imagine that your investment property has a negative gearing (which means the interest and other costs you incur are more than the income your investment property produces).

If this is the case, the loss can allow you to pay a lower overall tax rate on your profits (i.e., your salary) when filing your taxes.

To illustrate this point, let’s imagine that over the course of a year, you bring in a total of $70,000 in pay in addition to $20,000 in rental income.


If the annual net expenses for your rental property come to $35,000, then your rental property loss will be equivalent to $15,000 for the year. This indicates that the portion of your salary that is subject to tax will be reduced to $55,000.

If, on the other hand, your property is positively geared, which means that the rent you are earning is greater than the costs associated with holding the property, then you will be required to pay taxes on the net income that the property creates for you.

When capital gains tax is payable

In the event that you sell your investment property in the future and make a profit, you might be required to pay tax on your capital gains.

The good news is that the price you paid for the property (including buying and selling costs, such as stamp duty, legal fees, and the commision paid to the real estate agent) will minimise the amount that is regarded to be “profit.”

In addition, if you have owned the property for at least a year, you will only be required to pay capital gains tax on 50% of the profit made on the sale of the property rather than 100%.

Other hints to ensure tax entitlements are received

Keep any documentation that is pertinent from the beginning, so that you may make claims for everything to which you are entitled, and make sure that you disclose all of the revenue that is related to your rental property on your annual tax return.

For the purposes of capital gains tax, you will also need to keep records of the date and costs associated with the purchase of the property.

Additionally, you will need to keep records of any significant changes that may take place in the future, such as repairs, improvements, or if you decide to subdivide the property and sell part or all of it in the future.

Remember that maintaining these documents is one of the best ways to ensure that you are not paying any more in taxes than is absolutely necessary.

Before Making the Decision to Invest in Real Estate

Although investing in real estate can be a reliable and low-threat method for amassing wealth, there is always a possibility that you could lose money.

To determine whether or not purchasing real estate as an investment is a good idea for you, you need first do a thorough analysis of the potential rewards and dangers associated with the investment.

You can undertake a self-assessment to determine how much risk you are willing to take on by speaking with professionals and educating yourself. This will allow you to look clearly at the dangers so that you are aware of what is in store for you.

Evaluate The Risk

Although real estate is typically seen as a less risky asset than other potential investments, such as shares, you must still determine the level of risk associated with the investment.

You need to do a cash-flow analysis with the assistance of a certified public accountant, a property advisor, or a financial planner in order to determine the level of risk involved.

In addition, it is essential to think about all of the costs associated with having an investment property in order to determine how much you will actually be able to spend on it.


  • Price growth: Over the long run, the cost of real estate often goes up. Twenty years from now, the value of a property that is of high quality and is situated in a desirable area is likely to be significantly higher than the amount that you paid for it.
  • Cashflow: Because interest rates on mortgages are so historically low, the rental return you receive might serve as a source of supplementary income for you.
  • People will always have a need for housing, and while fashions will come and go, if you buy in a core suburb that is also conveniently connected, your property should continue to be in demand for rental even as trends change.
  • Tax Benefits: Investing in property entitles you to a number of tax and depreciation advantages, including negative gearing, which can reduce the out-of-pocket expenses associated with doing so, making it possible for more people to participate in the market.


  • If you put your money in property, your money will be “locked up,” which means that you won’t have easy access to it in the event that you need money in a hurry. Property is not a liquid investment.
  • Your monthly mortgage payments will go up if the interest rate on your loan is variable and subject to market fluctuations.
  • Changes in the circumstances: If the circumstances change and you find that you need to sell quickly, you can be selling during a “down” phase, which puts you at danger of losing money.
  • Poor performance: Despite the fact that property markets are, on average, very stable, not all property markets will expand, which means that you run the danger of owning a property whose value will not increase over time.

How Seeking Out Professional Counsel Can Improve Your Odds of Being Successful

It is recommended that you discuss the objectives of your real estate investment endeavours with knowledgeable professionals.

If you need assistance determining whether or not the property will be a profitable investment, consulting with professionals such as accountants, real estate specialists, conveyancers, buyer’s agents, local real estate agents, financial planners, and mortgage brokers can be of great assistance.

A mortgage broker can help you compare various home loans to ensure that you get a competitive deal that is tailored to your borrowing and investment goals.

An accountant can assist you in analysing your cash flow and managing the paperwork that is involved in the purchase of property, and both of these tasks can be made easier with the assistance of a mortgage broker.

Before you put your signature on the dotted line, a lawyer or other legal professional can assist you interpret and prepare legal documents.

You might also want to consider consulting with a buyer’s agent or a property expert for guidance on the purchase of an investment property and on how to buy the appropriate types of properties in order to achieve your monetary objectives.

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