The basics

To find out more about what's involved in investing, it's a good idea to speak with your accountant or financial planner. They'll help you get a better understanding of your current financial situation and needs and what investment plan will work best for you to achieve your goals.

Structuring your investment loan based on an investment plan particular to your situation, needs and objectives is important to ensure that you get the most out of the loan you choose. Once your investment plan is established, our home loan consultants can assist you in structuring your investment loan.


Create an investment plan

To make sure your investment is successful and works well for you, it's important to take the time to develop an investment plan. Here are some tips and tools to assist you.

Review your current financial situation:
First of all, it's important to evaluate your current financial situation and needs to see if you can afford to invest. You'll need to get an understanding of your total commitments over any period – weekly, monthly and yearly. This will help you work out if you have extra income to invest.

You'll also need to ask yourself a few questions:

  • Can I afford interest rate rises?
  • What if I can't find a tenant – can I still cover my repayments?
  • What if we start a family – can we live off one wage and pay off a loan for an investment property.

Considering these issues in your investment plan and speaking to your accountant or financial planner will help you decide if investing now is right for you.


Choose an investment property

The key to finding the right investment property is research. You need to do your homework to get your investment plan right. Finding the right house, on the right street, at the right time, at the right price – all these contribute to making your investment plan a success.

A good way to start your research is to decide where you'd like to buy your investment property. Then learn about local vacancy rates, rental rates, prices, demographics and any proposed council developments.

Here are some websites for you to kick-start your research:


Buying process

The three most common ways of purchasing an investment property are:

  • At an auction
  • Private sale
  • Off the plan

At an auction

Buying a property at an auction can be  challenging You may be competing with lots of potential buyers, which may  inflate the price. Or you may be lucky and be the only one bidding which may result in a good price.. As an investor the key is to understand what a property is worth so you can pay realistic price. Also understanding the rental demand in the suburb you are buying in and possible rental income for properties similar to the one you are considering.

Here are some tips for you.

  • Consider mortgagee and/or State Trustee auctions, where you may be lucky enough to get a bargain.
  • If you buy at an auction, you are usually required to pay a 10% deposit immediately after the auction. You'll need to pay either in cash or cheque (at the  auction or at the real estate agency) ..
  • Always ensure that you know the total amount you can borrow before the action. Our friendly home loan consultants can assist you with working this out.

Private sale

Some people choose to sell their property privately. One of the advantages of a private sale is that you may have more negotiating power with the owner to  obtain the property at the price you want.

One of the downfalls is that you may have less information on how many potential buyers have shown interest in the property, and there is less visibility about the other buyers’ interest in the property which could ultimately result in you paying too much.

A way to minimise the risk in this happening is again to do your homework and understand the area and likely rental demand.

Here's a tip for you:

  • Stick to your budget and don't let the seller or estate agent talk you into anything you're uncomfortable with.

Off the plan

Buying off the plan means signing a contract to buy a property and building based on design drawings before it is built.

The main benefit of buying off the plan is saving on stamp duty. Stamp duty is based on the value of the property on the date the contract is signed. So when you buy off the plan, your stamp duty is calculated on the value of the land without the building.

Another advantage to buying off the plan is that your property may increase in value between the time you sign the contract and settlement. This could be a period of months or even more than a year. So you get more time to save for fixtures, fittings and other costs.

But there are also risks associated with buying off the plan. For example the market price might stay the same or drop from the contract date to the time of settlement, or the builder may be unable to complete their part of the contract. Sometimes it's difficult to understand what the property will look like once it's built and there are no guarantees that the building quality will meet your expectations.

Here are some tips for you:

  • First in best dressed – so get in quick! You may be surprised at how fast the best lots can sell (such as apartments with balconies or scenic views). The earlier you get in, the more choices you'll have.
  • Find out about restrictions on the property that might affect the type of tenants you can have, for example: 
    • parking restrictions
    • changing the appearance of your property (frontage, exterior painting).
  • Make sure you read the terms and conditions and related contracts fully so that you know what your entitlements are and understand what you've signed up for.
  • Always review previous examples of the builder's work.


Do your research

As part of your research, it's a good idea to consider the demographics (statistics about people) of the area you're thinking of buying in. This will help you decide if this is the area you want for your property and your tenants.

Estate agents in the area can provide you with a demographic analysis of the suburb and surrounding suburbs. They can also give you rental income information and you can use this in your investment plan.

Local estate agents can also help you with the ongoing management of your investment property and tenants. It's a good idea to speak to more than one agency about the costs of rental property management. They typically work on a percentage of your total rental income received, so it's worth shopping around.


Create a budget

The most important part of making your investment plan work is creating a realistic budget. Sticking to your budget means you take full control of your finances and most importantly, you'll have enough money to pay your investment-related expenses such as repayments and council rates.

Here are some useful links.

  • You may find our Budget Planner useful in helping you create your budget.




Landlord rights

Your rights as a landlord

Make sure you know exactly what your legal rights and obligations are as a landlord.

Here are some useful links.

BSB: 704 230

Tools & Resources