10+ years
Buy and hold
Buy a solid property in a suburb with long-term demand and keep it. The least hands-on approach, and the slowest to show a result.
Talk it through
Property guide
Investment property strategies
Tips to help you make the most of potential profits and long-term value: what each strategy asks of you, what it costs to get in, and the numbers worth checking before you commit.
Before you shortlist
Three things to settle first
Get these straight and the rest of the decision (suburb, property type, timing) gets a lot easier.
1
Know which return you are buying
Rental yield pays you monthly; capital growth pays you once, at the end. Most properties lean one way or the other, so decide which you actually need before you shortlist suburbs.
- Gross yield = annual rent ÷ purchase price
- Net yield takes out rates, strata, insurance and management
- Growth is a forecast, not a number you can bank
2
Budget for the costs beyond the price
The purchase price is the headline, not the total. Transfer duty, legals, inspections, lenders mortgage insurance and the first round of repairs all land in the first few months.
- Set aside 5-7% of the price for purchase costs
- Hold a buffer of 3-6 months of repayments
- Budget for vacancy, and assume the place sits empty part of the year
3
Get the structure right before you bid
How you borrow, and in whose name, is harder to change after settlement than before it. Talk it through with a lender and an accountant while everything is still on paper.
- Interest-only vs principal and interest
- Ownership structure and how income is split
- Pre-approval, so you know your ceiling at auction
Four approaches
Which strategy fits how you invest
None of these is better than the others. They ask for different amounts of time, cash and patience.
From day one
Positive cash flow
Target properties where rent covers the loan and costs. Returns arrive as income rather than as a lump sum on sale.
Talk it through6-18 months
Renovate and revalue
Lift the value with targeted work, then have it revalued to release equity for the next purchase. Costs blow out easily.
Talk it throughOngoing
Rentvesting
Rent where you want to live, invest where you can afford to buy. Keeps your lifestyle and your portfolio in separate suburbs.
Talk it throughThe practical part
What to buy, where, and how it settles
House or apartment
Houses carry the land, which is what tends to appreciate. Apartments cost less to enter and usually yield more, but strata fees eat into the return.
Pick the street, not the city
Transport, schools and a supermarket within walking distance do more for demand than the suburb's name. Check what has actually sold nearby in the last six months.
Know the settlement path
Pre-approval, building and pest, contract review, finance clause, settlement. Each step has a date attached, and missing one can cost you the deposit.
Worth avoiding
The four that cost people the most
Every one of these is recoverable if you catch it early, and expensive if you do not.
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1
Buying on emotion, and treating an investment like a home you would live in.
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2
Forecasting rent from the agent's best case rather than the street's actual median.
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3
Leaving no buffer, so one vacancy or one repair turns into a forced sale.
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4
Ignoring the depreciation schedule and the deductions that come with it.
Next step
Run your numbers with a Abis Memorial Exchange home loan specialist
Bring the property you are looking at and we will work through the borrowing capacity, the buffer and the repayments with you, with no obligation to apply.
This guide is general information only. It does not take your objectives, financial situation or needs into account, and it is not tax or investment advice. Lending criteria, fees and terms apply. Speak with Abis Memorial Exchange and your own accountant before making a decision.