So, you want to buy an investment property...huh?!
So, You Want to Buy Your First Investment Property, huh?!
Most people think their first property has to be the one they live in.
I promise you, it doesn't!
More first-time buyers are skipping the dream home and buying an investment property instead.
They keep renting where they want to live and buy where the numbers work.
It's called rentvesting, and for a lot of young buyers it's the only version of "getting in" that is actually possible. ABS lending data showed more than 8,000 first home buyers took out investment loans in 2024, up by 12 percent on the year before, with investor loans to first-time buyers growing at more than double the pace of traditional owner-occupier loans.
But whether you're rentvesting or buying to hold long term, being a first-time investor is a different game to buying an actual home to live in.
Here's what you need to know:
Your borrowing capacity works differently
When you buy an investment property, lenders look at two incomes: yours and the rental income generated by the property itself.
That's the good news! Expected rental income gets added to your application, which can boost how much you can borrow. Most lenders will count around 70 to 80 percent of the rent, because they know properties sit vacant sometimes and tenants don't pay your strata fees.
But here's the "catch" ... Investment loans usually come with slightly higher interest rates than owner-occupier loans. Lenders see them as higher risk. Not dramatically higher, but enough that you should factor it into your budget from day one.
The deposit question
You'll generally need a bigger deposit as an investor. Plenty of lenders want 20 percent to avoid Lenders Mortgage Insurance, and some are stricter on investment lending than owner-occupied.
Can you buy with less? Absolutely! You can go in with 10 or 12% and pay LMI. Sometimes that's the right call, because waiting two more years to save while prices move can cost you more than the insurance premium. Sometimes it's not. This is exactly the kind of maths a broker (like moi) runs with you before you fall in love with a property.
One thing I often see first-time investors miss: The Australian Government 5% Deposit Scheme is owner-occupier only, and investment properties don't qualify. Buy as a pure investor and you may lose access to those benefits.
Buy with your calculator, not your heart
This is the biggest mindset shift.
When you buy a home, you're allowed to care about the kitchen the bathroom and all the pretty aesthetics that make it a home. When you buy an investment, the only questions that matter are: will it rent, will it grow, and can I afford to hold it?!
That means looking at things like:
Vacancy rates in the suburb. Low vacancy means tenants compete for your property, not the other way around.
Rental yield. What the annual rent looks like as a percentage of the purchase price. It tells you how hard the property works for you week to week.
Growth drivers. Population growth, infrastructure spending, jobs. Not "I like the cafe strip and boutique shops."
And here's the freeing part: you don't have to buy where you live. Some of the best opportunities for Sydney-based first-time investors are in Perth, Brisbane or Adelaide.
Know your holding costs before you buy
MoneySmart's property investment guide is a good baseline here. As an investor you're covering:
Council and water rates
Strata fees (if it's a unit or townhouse)
Landlord insurance
Property management fees, usually 5 to 8 percent of rent
Repairs and maintenance
Land tax, depending on the state and how much you own there
A property can be "positively geared" (rent covers everything with money left over) or "negatively geared" (you top it up each month, and the loss can reduce your taxable income). Neither is automatically better. What matters is that you can comfortably carry the property through a vacancy, a rate rise, or a hot water system dying in in winter.
Stress test your own numbers. If rates went up 2 percent and the property sat empty for a month, would you still sleep at night? If yes, you're ready to go. If no, adjust the budget and play with the numbers to see if they work.
Why a broker matters more for investors
For a standard home purchase, the difference between lenders is mostly rate. For investors, the differences run deeper.
Lenders vary wildly on how much rental income they'll count, how they treat your existing debts, what they'll lend on (some hate small apartments, some won't touch certain postcodes), and how they assess you if you plan to buy again.
That last one is huge. The lender that gives you the biggest loan today isn't always the one that sets you up to buy property number two.
A good broker isn't just finding you a rate. They're structuring your first purchase so it doesn't block your second.
So, the summary:
Buying your first investment property comes down to five things:
1. Understand that investment lending has different rates, deposits and rules
2. Check how an investment purchase affects any first home buyer benefits
3. Choose the property on numbers, not feelings
4. Budget for the full holding costs, then stress test them
5. Get your loan structured for the portfolio you want, not just the purchase in front of you
You don't need to be rich to start. Shocking, I know!
You need a deposit, a plan, and numbers you've actually pressure tested.
That's what separates investors who buy one property from investors who build a portfolio.
This article is general information only and doesn't take your personal circumstances into account. Speak to a qualified mortgage broker or financial adviser before making any lending or investment decisions.
Eshanee Collins is the founder and lead Mortgage Broker of April Six. She helps first home buyers and first time investors navigate each stage of the home buying process. April Six is a member of the MFAA and authorised under Purple Circle Financial Services ACL 419372.