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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.

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. Click here to view our renovation loan options.

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,

Your own home loan specialist

  • One point of contact for information and guidance throughout your home loan journey.
  • Available seven days a week, our mobile lenders can meet at a time and place that suits you.

" 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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