Most Australians buy a home. Far fewer buy an investment property. The gap is rarely about wanting to, it is usually about not knowing how the finance side works.
This guide walks through the whole path, from finding a deposit to choosing a property to understanding the tax. Each section links to a deeper guide if you want the detail.
Where does the deposit come from?
Most first-time investors do not save a second deposit. They use the equity already sitting in their home.
Equity is the difference between what your home is worth and what you owe on it. Lenders will generally let you borrow up to 80% of your home value, so your usable equity is 80% of the value minus your current loan. On a home worth 800,000 dollars with 300,000 owing, that is 340,000 to work with. How to use equity as your deposit.
If you do not have enough equity yet, there are other routes, including a smaller deposit with lenders mortgage insurance, or a guarantor. Buying with little or no deposit.
How much will a lender actually let you borrow?
Having the equity is one thing. Servicing the loan is another, and this is where most investment applications come unstuck.
Lenders assess whether you can afford the repayments at a rate well above the actual rate, using an assessment buffer. They also discount your expected rental income, typically counting only a portion of it, because vacancies and costs are assumed. So your borrowing power on an investment is usually lower than the headline numbers suggest. How borrowing power works for investors.
What should you actually buy?
Buying an investment is not buying a home. You are not choosing somewhere you want to live, you are choosing something a tenant will rent and a future buyer will want.
- What to weigh up before you buy
- Spotting a property tenants actually want
- New build or established property
- Commercial property instead of residential
- Whether holiday homes stack up
You can also run the numbers before you commit. Work out the rental yield.
If you are buying outside your own city, a buyer agent can be worth the fee, because local knowledge is the thing you cannot get from listings. Finding a good buyer agent.
How does the tax side work?
Rental income is taxable, and a long list of expenses are deductible against it, including loan interest, management fees, insurance, rates, repairs and depreciation. When you sell, capital gains tax applies. The 2026 reforms changed how CGT and negative gearing work on investment property from 1 July 2027, so the treatment now depends on when the property was bought and whether it is a new build. The full tax guide.
Negative gearing, where the rent does not cover the costs and you offset the loss against your income, is common in Australia but it is not automatically a good idea. Why negative gearing cuts both ways.
What goes wrong?
Worth reading before you buy rather than after.
- The common investment mistakes
- How to spot a property spruiker
- Investing versus speculating
- The costs people forget to budget for
Does property suit you at all?
Property is not the only way to build wealth, and it is not the right one for everybody. It is illiquid, it concentrates your money in a single asset, and the entry costs are high.
- Property or shares
- Building a diversified portfolio
- How compound growth works
- Looking beyond your own city
Buying with someone else
Pooling resources with a family member or a friend lowers the entry barrier and increases your buying power. It also needs to be documented properly.
You can hold the property as joint tenants, where both parties own it equally and the survivor inherits automatically, or as tenants in common, where each holds a defined share they can leave to whoever they choose. The difference matters, and it is worth getting legal advice on which structure fits before you sign anything.
Should you wait for the right moment?
Investors often hesitate during a downturn, which is usually when the competition is thinnest.
Property is a long hold. Over a typical holding period you will see both rising and falling markets, so the entry point matters less than the quality of what you buy and whether you can comfortably hold it through a bad year. Properties with owner-occupier appeal tend to hold value better, because when you eventually sell you are selling to a much larger pool of buyers than investors alone.
Common questions
Can I buy an investment property with no deposit?
Not with nothing at all, but you may not need cash savings. Equity in your existing home can cover the deposit, and a guarantor arrangement using a family property is another route. Both mean borrowing against property you or your family already own.
Is it harder to get a loan for an investment property?
Generally yes. Lenders often require a larger deposit, charge slightly higher rates, and count only a portion of your expected rental income when assessing whether you can afford it. They also apply an assessment buffer well above the actual rate.
Should I pay off my home before investing?
Not necessarily. Interest on money borrowed to invest is usually tax deductible while interest on your own home is not, so there can be an argument for keeping the home loan and borrowing to invest. It depends on your income, your tax position and how comfortable you are carrying two loans.
How much rental income will a lender count?
Usually only a portion of it, commonly around 80%, to allow for vacancy periods, management fees and maintenance. Budgeting on the full rent covering the loan is one of the more common miscalculations first-time investors make.