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  Planning to buy a home

Buying an investment property

Many successful property investors take a strategic approach to researching markets, crunching numbers and regularly reviewing their investment’s performance.

Guidance every step of the way

Your Home Buying Checklist
An interactive tool that supports you through each stage of buying a home.

Finding the right strategy

Your property investment strategy should be a good fit for your timeframe and personal situation. Talk to a financial adviser about what could be right for you. Below are some pros and cons of three popular property investment strategies here in Australia.

Positive cashflow strategy

You have a positive cashflow property when the income you receive (the rent) is greater than the costs of holding the property (such as mortgage repayments and maintenance).

The pros

  • You’re earning a profit from your investment month-by-month.
  • There are no out-of-pocket expenses.
  • Positive cashflow properties can often be cheaper to buy, which means you may pay less in stamp duty and taxes.

 

The cons

  • You must pay tax on the profits you make.
  • You may have to look for properties in areas that provide less growth potential than a negative cashflow area.
  • Other investments may earn you more income.

Capital growth/negative cashflow strategy

You have a negative cashflow property when the expense of holding the property is more than the income made from the property.

Example: if your annual rental income is $40,000, and the annual cost of holding the property (maintenance, interest costs etc.) is $50,000, you have a negative cashflow of $10,000.

The pros

  • You can claim any losses your property has made ($10,000 in the example above) to reduce your taxable income.
  • If you choose wisely, your negative cashflow property can produce more capital gains over the term of the loan than what you pay in out-of-pocket expenses.
  • As you pay down the loan, and inflation increases rental prices, your investment may eventually turn into a positive cash flow investment.

The cons

  • You'll need to cover the difference between what you make as income and what the costs are (in the example above, that would be $10,000 in one year)
  • It's a more volatile strategy – interest rates may rise and increase your out-of-pocket expenses.

Renovation strategy

Renovating your property could add a lot of value to your investment in the long run. However, with any potentially lucrative renovation also comes a lot of risk. Whether you’re renovating to invest or to ‘flip’ and sell on, there are some important things to consider before you take the plunge.

The pros

  • You have more control over the design process. More control means you can direct the renovation from the very beginning, tailoring your changes to suit trends in the marketplace.
  • A good remodel could add more value to your investment, both in the short and long-term. This is particularly handy if you live in a more expensive urban area where newer houses are typically priced much higher.
  • You’ll have more flexibility to expand. This is ideal for growing families and savvy investors looking to add even more value to the initial investment.

The cons

  • You could easily go overbudget. Even the best laid renovation plans can quickly go above and beyond what was originally scoped.
  • You’ll have to juggle a lot of moving parts. From tradie schedules through to unusable rooms during the remodel, it could leave you racing against the clock.
  • There’s no guarantee you’ll get your money back. An ill-timed or poorly executed renovation could negatively affect your initial investment,

Investment strategies are always best discussed with an experienced financial planner. Suncorp Bank has a team of expert financial planners who can help. Learn more.

Our investor home loan rates

View our Suncorp Bank home loan interest rates or generate a facts sheet for one of our loans.

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" My husband and I were looking to buy an investment property and we were so fortunate to have Nelvin help us every step of the way. He went above and beyond and was always there, willing to answer my endless list of questions and concerns. "

- Chris & Jess Falla

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* Discounted Back to Basics Variable Rate with Better Together Special Offer

Advertised discounted rate valid from 21 June 2019, is subject to change without notice and may be withdrawn at any time. Offer available for new Investment >=$150,000 where borrowings <=90% of the security property value (LVR) inclusive of lenders mortgage insurance (where applicable). Disclosed rate is Principal and Interest, Back to Basics Variable (currently 5.41% p.a.) less net discount of -1.62% p.a. Rate and discount may be varied if the loan purpose or repayment type is changed or where the borrower fails to hold a Suncorp Bank transaction account. Pre-approvals excluded. Banking Products are issued by Suncorp Bank. Please read the relevant Product Information Document and the Terms and Conditions before making any decision regarding this product. These documents are also available at Suncorp Bank stores on our Product Information Documents and Forms page.

^ Discounted Standard Variable Rate with Home Package Plus

Advertised discounted rate valid from 21 June 2019, is subject to change without notice and may be withdrawn at any time. Offer available for new Investment >= $150,000 where borrowings <= 90% of the security property value (LVR) inclusive of lenders mortgage insurance (where applicable). Disclosed Interest Rate is based on Principal and Interest, Standard Variable (currently variable interest rate of 6.04% p.a.) less package net discount of -1.95% p.a. A discount is applied for as long as the loan remains part of the Home Package Plus. Rate and discount may be varied if the loan purpose or repayment type is changed. Pre-approvals excluded.

# Discounted 3 Year Fixed Rate with Home Package Plus

Discounted rate special offer is only available for new investment loans taken out as part of the Home Package Plus >= $150,000 and borrowings <= 90% of the security property value (LVR) inclusive of lender’s mortgage insurance (if applicable), with Principal and Interest repayments. The discounted rate (currently 3.69% p.a.) is calculated by subtracting a discount of 0.45% p.a. from the Standard 3 Year Fixed Rate (currently 4.14% p.a.). At the expiry of the 3 Year Fixed Rate Term, the loan will revert to the applicable Standard Variable Rate advertised at the time (currently 6.04% p.a.) less the Home Package Plus discount (currently 1.95% p.a.). The discounted special offer rate is only applicable to the 3 Year Fixed Rate loan while the loan remains in the Home Package Plus. The discounted special offer rate is available on eligible loans applied for from 21 June 2019. Rates and discounts are subject to change. The Standard 3 Year Fixed Rate applicable on the day of settlement of the loan will be used to calculate the applicable discounted fixed rate unless the rate has been secured by paying a Guaranteed Rate Fee, which must be selected at time of loan application. Pre-approvals excluded.

+ COMPARISON RATE WARNING:

Each comparison rate is based on $150,000 over 25 years. These comparison rates apply only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. Comparison rates for Interest Only Fixed Rate home loans are based on an initial Interest Only period equal in length to the fixed rate period. Comparison rates for Interest Only Variable home loans are based on an initial 5 year Interest Only period.

Various products and services are provided by different entities of the Suncorp Group. The different entities of the Suncorp Group are not responsible for, or liable in respect of, products or services provided by other entities of the Suncorp Group. This advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it. For that reason, before acting on the advice, you should consider the appropriateness of the advice having regard to your own objectives, financial situation and needs. Where the advice relates to the acquisition, or possible acquisition, of a particular financial product, you should consider the Product Disclosure Statement before making any decision regarding the product.

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Banking Products and Home Loans are issued by Suncorp-Metway Ltd ABN 66 010 831 722 AFSL No 229882 Australian Credit Licence 229882 (“Suncorp Bank”) to approved applicants only. Please read the relevant Product Information Document and the Terms and Conditions before making a decision regarding any Suncorp Bank products. Fees, charges, terms and conditions apply and are available on request or on our Product Information Documents and Forms page.

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The information is intended to be of general nature only. We do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries.

Fixed Rate

Lock in your interest rate and repayment amount

Variable Rate

A rate that is variable and is subject to change over the loan term.

Comparison Rate

A comparison rate is a rate that indicates the true cost of a loan. This rate incorporates certain fees and charges that are applicable for the chosen product. For more information about the comparison rate and the comparison rate warning, please refer to the things you should know section of this page.