How to invest in property

Get the right start in property investment

As you look to start investing in property, knowing where to begin is often the biggest challenge.

Where should you buy? What steps do you need to take? And most importantly – which properties will actually help you achieve your goals? These are questions many of us have when starting out in property investment.

It’s also why having a property investment plan is critical for first-time investors.

Our property investment plan for beginners is designed to help you set the best possible foundation for your investment property portfolio, by helping you identify the right strategy and property types for your needs.

You then have the option to execute this plan through our in-house property investment services, ensuring you receive the highest-quality, tailored  support as you build your property investment portfolio.

Get in touch

Fill out the form below to enquire about our property strategy and planning services

  • By providing your email address, you are consenting to receive marketing communications from Momentum Wealth in future, on the understanding that you have read and agree to our Privacy Policy and that you can opt-out at any time.

  • This field is for validation purposes and should be left unchanged.

How our property plans work

At Momentum Wealth, we understand that every investor has unique goals and circumstances, and there is no one-size-fits-all approach on how to invest in property. That’s why we work with you to gain an in-depth understanding of your unique situation, so that we can provide you with tailored advice specific to your circumstances.

Benefits of working with us

Property investment for beginners – your essential pack

Getting started in property investment? Download our investor pack to access our essential toolkit for beginner investors:

  • Free budget planner
  • Beginner’s Guide to Property Investment
  • The 3 essential factors that drive property growth

What our clients say about us

We are first time property investors and found the Team at momentum wealth extremely diligent and patient, they found us a great property in a great location, giving us a solid foundation for future ventures. At first it was very daunting seeking a buyers agent, we now realise how much value they provided us and how essential it was to the process!
Rick Wise
I would highly recommend Momentum Wealth. The process was smooth, time was taken to understand my objectives, key concepts were thoroughly explained, a strong commitment to achieving the required dates and the quick, direct and ongoing support was excellent. A very professional service.

Mark Musulin
Being time poor with little knowledge of the property investment market led us to approach momentum to ensure we didn’t repeat past investment mistakes. It was reassuring to have the all the services necessary to help us on this journey in one location. Everyone we liaised with was always friendly, courteous and knowledgeable, this ensured we were kept well informed and supported throughout the entire process. We will definitely be using momentum again when adding to our property portfolio.

Donna Forte
Momentum Wealth are professional, transparent and have open communications with all aspects of finance, acquisition and negotiation process which made it a stress-free task. All team staff were more than helpful in advice, guidance and any questions I had at anytime. Momentum Wealth is the one stop shop I will use for my property profile development from now on.

Ryan Wakelam

Get started today

Ready to take the next steps? Request an obligation-free consultation with our property experts to get started

  • By providing your email address, you are consenting to receive marketing communications from Momentum Wealth in future, on the understanding that you have read and agree to our Privacy Policy and that you can opt-out at any time.

  • This field is for validation purposes and should be left unchanged.

Frequently asked Questions

How does property investment work?

With a proven history of long-term performance and less volatility in comparison to most other asset classes, property has long been a popular form of investment in Australia. As a result, many investors recognise property as an important part of their wealth creation strategy.

There are 3 key components to generating a return on investment when it comes to real estate:

  1. Capital growth
  2. Manufactured equity
  3. Cash flow

Capital growth

Capital growth refers to the increase in value of an asset over time. It is measured by comparing the current value of the asset to its purchase price.

Capital growth is one of the core focuses for most property investors, as this growth can then be used to support further portfolio expansion.

By identifying locations and specific properties that are exposed to strong demand and supply factors, investors can see the value of their property increase, which can add up to significant amounts over time.

Manufactured equity

Manufacturing equity refers to adding value to your asset. It is essentially any strategy you use to build – or “manufacture” – more equity in your property.

Such strategies may include renovating or extending an existing property or buying sites with subdivision and development potential.

Cash flow

Cash flow refers to the rental income generated by a property, versus the costs of holding the property.

Most residential investment properties will be negatively geared in the early stages. By actively managing your portfolio, you can reduce your cash outlay, or even convert your property to be income-positive over time. This may include adding rental value to the property through renovation or development; paying down and/or refinancing your loan; or adding an ancillary dwelling to your property as a second source of rental income.

What is negative gearing?

Property investments can generate positive cash flow or negative cash flow. Positive cash flow is when your rental income exceeds your expenses. Negative cash flow, on the other hand, is when your expenses exceed your rental income.

‘Negative gearing’ occurs when the costs of owning a rental property exceed your rental returns. The upside of negative gearing is that any net rental loss you incur during the financial year may be offset against other income you earn, such as your salary. This, in turn, reduces your taxable income – and therefore the amount of tax you pay.

How much deposit do I need for an investment property?

Almost all Australian lenders will require borrowers to contribute some form of deposit before they approve a mortgage.

The amount of money you need for a deposit will depend on a number of factors. These include the price and location of the property you are purchasing; your eligibility for government grants and incentives; the lender’s individual policies; whether you are using any equity from an existing property you own; and your own property investment strategy.

However, as a general rule, you’ll need to pay at least a 20% deposit (an 80% loan-to-value ratio) for a loan if you want to avoid paying Lender’s Mortgage Insurance – or LMI – across the life of the loan.

LMI is an insurance policy that you pay as the buyer if you take out a loan for more than 80% of a property’s value, to protect the lender in the case that you default on your loan repayments. LMI is around 1-3% of the value of the loan, generally increasing the higher the loan-to-value-ratio (LVR) is.

Some banks will be willing to lend up to 95% of a property’s value with LMI, providing you have a strong credit history, evidence of genuine savings and a steady income.

However, you will also need to factor in the additional upfront costs associated with the purchase of a property, including stamp duty and conveyancing costs.

How does owning an investment property affect taxes?

If you earn income from a property at any time, you will have to report the income and expenses to the Australian Taxation Office (ATO).

Any rental income you receive forms part of your annual taxable income, which is taxed at your marginal tax rate for that year.

However, there can also be tax benefits to owning an investment property. Most costs associated with your investment property can be deducted against your taxable income – which, in turn, reduces the amount of tax you pay overall.

Common property tax deductions include:

  1. Loan interest
  2. Rental expenses (marketing, property management fees, commission etc.)
  3. Rates & fees (council rates, water rates, strata fees, etc.)
  4. Maintenance & repairs
  5. Depreciation (depreciation of the building and fittings, depending on when they were installed)
  6. Pest control
  7. Insurance
  8. Accounting costs
  9. Legal expenses

It’s important to understand both your tax obligations and the tax concessions you are entitled to as an investor. An experienced accountant will be able to help you navigate the complexities of taxation relating to your investment property.

How do I start investing in property?

There are several key components to starting a successful property investment journey. These include:

1 – Define a strategy

Any property investment journey should start with a clearly defined strategy.

When it comes to property investment, there is no ‘one size fits all’ solution and every investor will have their own individual set of circumstances and goals.

Your property investment strategy  should therefore be tailored to your unique situation, taking into account your objectives, your appetite for risk and your financial position.

We recommend working with an experienced property investment expert to develop a tailored property investment plan specific to your circumstances.

2 – Structure your finances

Maintaining a healthy lending portfolio is a critical component of any investment strategy. From securing the right loan solution, to structuring it in a way that minimises your risk, effective financial planning is key to your success as an investor.

Having the right loan structure in place can have significant implications not only on the security of your asset, but also on your ability to purchase more assets and access your property’s equity in the future.

It’s advisable to speak to an experienced mortgage broker  with extensive knowledge of the lending market who can identify loan solutions that best suit your unique circumstances.

3 – Proactively manage your property

While many property managers excel at day-to-day management, choosing a property manager with a proactive approach to maximising your property’s rental performance can help to increase your return on investment. This may include recommending cost-effective improvements to enhance market rent, implementing special clauses to protect your rental cashflow, or identifying opportunities – such as dual-income strategies – to increase your rental returns.

If you would like our experienced team to assist you in starting a property investment portfolio, please contact us to book a free consultation.

How does equity work when buying an investment property?

‘Equity’ refers to the difference between your property’s market value and the balance owing on your loan. For example, if your property is worth $500,000 and you owe $200,000 on your mortgage, your equity would be $300,000.

When it comes to buying an investment property, you might not need to put down a significant cash deposit. If you’re a homeowner, you may be able to use some of your home equity in lieu of cash savings as a deposit on an investment property.

In the same way as when you purchase a home to live in, a bank will most likely lend you up to 80% of your investment property’s value. While it may be possible to borrow more, borrowing above the 80% benchmark will generally incur Lender’s Mortgage Insurance (LMI).

The following example demonstrates how you can leverage off your home equity to purchase an investment property:

Let’s say you own a home valued at $500,000 and your mortgage balance is $200,000.

A lender will determine your lending equity based on 80% of your home’s value, minus your remaining home loan debt.

This works out to be:

  •  80% of $500,000 (your home’s current value) = $400,000
  •  $400,000 minus $200,000 (your mortgage) = $200,000

This $200,000 equity can be used to pay a deposit on an investment property. From there, you can source another loan for the remaining balance of the purchase price.


Subscribe to get our expert insights delivered straight to your inbox.

Newsletter Subscription

  • This field is for validation purposes and should be left unchanged.