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Buying Your First Investment Property


So you have bought your first home, paid down the mortgage on it, and are considering starting to invest?  Is superannuation going to be enough for your retirement or should you look at alternate investments in addition to super? If you are thinking of buying your first investment property then this is the page for you.

Understand the costs of buying the property

Unlike your owner occupied home there are no concessions for the purchase of investment properties.  If your investment property is your first purchase you will not be eligible to take advantage of the First Home Owners Grant. To work out the additional fees and taxes that apply when purchasing an investment property, we recommend that you contact your mortgage broker or the state government website of the state that you intend purchasing the property in. It is important to note that the fees levied on property purchases vary from state to state. For example, whilst Queensland does not have mortgage stamp duty, New South Wales does so this would be an added cost should you wish to cross the border to make your property purchase.

Picking the right property

Looking in the same area you live in and wondering why you can’t afford to buy an investment property?  A great way to start out is on the fringe suburbs with good transport links and surrounding schools. Whilst you may not want to live there it may be perfect for a young family who could be your ideal tenants. Doing your research also helps with the buying process and a number of websites provide free data such as median rental and average value of property for suburbs.

Getting the right return

No one wants to lose money on an investment so it is best to do your research.
Have a look at the local government plan for the area you are looking a buying into to see if there are future upgrades to the area which may improve the value of the property.  Generally properties with access to public transport and in proximity to hospitals, universities and centers of employment will have a good chance of price appreciation in the long term. Be aware of current and proposed flight path changes as this can have a big impact on property values.

Speak with your local agents to see which areas are selling and which ones they think have hidden gems in them.

Do the math on the investment; work out the net impact your cashflow by working out the timing for when bills are due for the property against the regular income for the property.


Make sure you don’t get caught out on your cashflow

Have savings up your sleeve should the property be vacant for a prolonged period of time.  It is good to work out how long you can afford to make the mortgage repayments out of your own pocket before you run into cashflow problems.  No one expects a property to be vacant but if it’s not priced correctly then you can find yourself out of pocket.

Having the right insurance

Buying a unit?  The body corporate cover the insurance and therefore you don’t need to worry about separate insurance?  No quite that easy.
Insurance when owing an investment property is not just about building and fixtures and fittings insurance.  Landlords insurance allows you to insure against malicious damage by a tenant and some cover also provides for unforeseen loss of a tenant including abandonment of the property.

Obtaining a tax depreciation schedule

One of the benefits of an investment property is being able to claim for the repairs and maintenance on the property.  It is also recommended that you get a qualified quantity surveyor to complete a tax depreciation schedule for you so that you can correctly claim the maximum deprecation allowable which may reduce your income tax payable.

By Lauren Eakins

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