If you’re looking to invest in the Aussie property market, here are some key points to consider at any age.

If you’ve been saving for a while and feel you’re ready to purchase your first investment property, it’s worth ensuring you’re across some important points so you can make a well-informed decision.

Remember, property prices can go through major swings that can occur with little warning, so while property values might go up, keep in mind they might also go down, which could see you breakeven or even incur a loss depending on how long you hold on to the property for.


Have you set a budget within your means?

You may be looking at an investment loan term of 25 or 30 years, depending on the size of the deposit you’ve saved. And, as this may be one of the biggest debts you’ll ever take on, it’s important to prioritise any other financial goals you might have before jumping into anything.

If you already own a property, it may also be possible to access the equity you have in it to secure additional finance from your lender. Check out some of the pros and cons in our article - How to build equity in your home and use it to invest. Meanwhile, here’s a snapshot of some of the upfront and ongoing costs you may come across.

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 ratesWater ratesInsurance (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 looked at your credit report lately?

If you’ve got a credit card, mobile phone plan or utility account, there’s probably a credit reporting agency out there that has a file with your name on it. 

Credit providers give information about you to credit reporting agencies and they also access this information to determine whether they want to lend to you.

With that in mind, before you start inspecting properties, be sure to check your credit history, as a tarnished credit report could affect your ability to get approval on a loan.

Have you researched where to buy and what to buy?

What you decide here will impact the money you could make in both the short and long term. When you’re doing your research, things to investigate might include:

  • What properties are selling for in the suburbs you’re looking at
  • Whether these suburbs have price growth potential
  • If there are proposed developments nearby that could affect prices
  • Whether you’ll need to renovate and if you have the extra funds to do so
  • What average rental returns and vacancy rates are like in these areas
  • Whether there are local amenities, such as schools, shops and transport nearby.

Have you thought about who’ll manage the property?

If you’re time poor or located a long distance from your investment property, another thing you’ll need to think about is appointing a property manager. Note, this this will come at a cost of approximately 7% to 10% of your total rental income each week1. Some of the things a property manager will take care of include:

  • Advertising the property
  • The screening of potential tenants
  • Before and after property condition reportsRoutine inspections
  • How and when tenants pay the rent
  • Maintenance and repair issues
  • Responding to complaints/evictions.

Websites like Local Agent Finder can help you locate property managers in the area you’re looking at and compare fees, services and experience.

Are you across your legal obligations?

While property managers can help out in a variety of areas, as a landlord you will still need to be aware of your legal obligations. There are various responsibilities that apply to landlords before, during and when ending a tenancy. These can differ depending on which state in Australia the investment property is located.

For details, check out the appropriate state government or Fair Trading website where your investment property is based.

Have you investigated potential tax deductions?

When you own an investment property, you can often claim a tax deduction on a variety of expenses related to the property during the time that it’s rented out, or available for rent.

Such items include but aren’t limited to things like:

  • Advertising costs
  • Property management fees
  • Borrowing expenses, including loan interest charges and fees
  • Council rates, land tax and strata fees
  • Building depreciation and the loss of value over time in fittings and fixtures like ovens, dishwashers, carpets and hot water systems
  • Repairs, maintenance, pest control, cleaning and gardening costs
  • Building and landlord insurance
  • Phone costs and stationery
  • Accounting and bookkeeping fees.

Note, travel undertaken to inspect the property is generally no longer a claimable expense in Australia. See other things you can claim on the ATO website.

Are you across other tax implications?

How negative gearing can reduce what you pay in income tax

If your property is negatively geared (which means the interest and other costs you incur are more than the income your investment property produces), the loss can reduce the amount of tax you pay on your earnings (i.e. your salary) at tax time.

To give you an example, say you earn a salary of $70,000 and a rental income of $20,000 over a 12-month period. If your net rental property expenses are $35,000, your rental property loss will equal $15,000 for the year, which means you’ll only pay tax on $55,000 of your salary.

If your property is positively geared on the other hand (meaning the rent you’re generating is more than the cost of owning the property) you’ll have to pay tax on the net income the property generates.

When capital gains tax is payable

If you sell your investment property down the track and make a profit, capital gains tax may be payable. The good news is, the price you paid for the property (including buying and selling costs, like stamp duty, legal fees and the real estate agent’s commission) will reduce the amount considered as ‘profit’.In addition, if you’ve owned the property for at least 12 months, 50% (rather than 100%) of the profit you make will be subject to capital gains tax.

Other hints to ensure tax entitlements are received

From the get-go, keep any relevant documentation so you’re able to claim everything you’re entitled to, and ensure you declare all your rental-related income in your tax return each year.

You'll also need to keep records of the date and costs of buying the property for capital-gains-tax purposes, and anything regarding significant changes that may take place, such as repairs, improvements or should you decide to subdivide and sell part or all of the property down the track. Remember that keeping these records will help make sure you don’t pay more tax than you need to.

Where to go for more information

Like most big investments, planning can play a big part in the returns you generate.

In the meantime, it may be worth speaking to your adviser, or if you don’t have one, you can call us on 131 267 or use our find an adviser search page.

You can also request a call back from an AMP home loan expert if you’d like details about our range of home loans.

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What you need to know

The credit provider for all banking products is AMP Bank Limited ABN 15 081 596 009, AFSL and Australian Credit Licence 234517. Approval is subject to AMP Bank guidelines. Terms and conditions apply and are available at amp.com.au/bankterms or by calling 13 30 30. Fees and charges are payable.

Any advice and information is provided by AWM Services Pty Ltd ABN 15 139 353 496, AFSL No. 366121 (AWM Services) and is general in nature. It hasn’t taken your financial or personal circumstances into account. 

It’s important to consider your particular circumstances and read the relevant product disclosure statement, Target Market Determination or terms and conditions, available from AMP at amp.com.au, or by calling 131 267, before deciding what’s right for you.

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All information on this website is subject to change without notice. AWM Services is part of the AMP group.