Steps to investing in property

There are five main steps to investing in property. Take some time to learn them, as they can help you maximise the return on your investment. They are:

Choose your investment strategy.
Pick your home loan and repayment strategy.
Choose a property type and location.
Organise insurance.
Rent out your property.

Step 1: choose your investment strategy

Firstly, and most importantly, you have to decide that investing in property is right for you, by weighing up all the pros and cons. Benefits include:

Property can be a fairly secure, long-term investment.
It’s a tangible and solid asset.
It can pay itself off, when rent covers the loan payments.
Your property can provide tax benefits through gearing.
Deductions (expenses) can be offset against income from rent.

Expenses you can usually deduct include:

Loan interest
Body corporate (strata) fees
Local government and water rates
Land tax
Gardening expenses
Advertising expenses
You can also claim depreciation on assets like furniture, carpeting and white goods in your investment property. Ask your accountant about the best way to calculate depreciation, as there are a variety of options.

To learn about the risks involved, follow the link to the ‘understanding risk’ topic in ‘Planning your investment’.

Step 2: pick your home loan and repayment strategy

Once you’ve weighed up all the pros and cons, it’s time to choose from our range of investment home loan options. Once you’ve found the loan that’s right for you, your next choice is the strategy for repaying it. Your repayment options include:

Interest only
Interest in advance
Principle and interest

Find out more about choosing a repayment strategy.

You can also choose from a variety of our home loan add-ons at this point, to help make your loan work harder and maximise the earning potential of your investment property. These are:

Find out more about home loan add-ons

Step 3: choose a property type and location

Choosing the right type of property in the best possible location is an important step towards seeing the returns you want from your investment.

Property considerations include the type of property that suits your plans – a house, unit, holiday home, retirement villa, or even hotel room are all options. Think about the property’s age – does it need renovating? Finally, the type of property you choose will also determine your potential rental returns.

When you’re choosing a location, try to buy in a growth area and consider the things a prospective tenant might look for. Public transport options plus proximity to shops, schools and parks can all be important to renters.

Also remember to look at the number of rental properties already in the area. Higher numbers mean increased competition and might limit your ability to earn the rent you want from your property.

For free suburb profiles try out our Property Value Guide.

Step 4: organise insurance

It’s important to insure your investment property as you would your own home – remember, you’re about to become a landlord. Our Investment Home Package has been designed with the needs of a landlord firmly in mind. Plus, insurance on an investment property is tax deductible, so it won’t have a big impact on your returns.

Find out more about insurance.

Step 5: rent out your property

The final step is renting out your property. You can either do this privately or through a local real estate agency, which will act as your property manager. As your property manager, they’ll screen applicants and manage the day-to-day renting process for you, generally for 10% of your weekly rental income.

Two more things to think about

While it’s a long-term investment, it’s good to take an active approach to managing your property. Keeping the following tips in mind to help maximise your returns:

Regularly review the strategy you’ve taken with your investment home loan and consider which repayment option will work best for your individual needs.
Review your financial goals to see whether the results you’ve achieved so far have matched your expectations. Is your investment mix still working for you?

Understanding our advice

Download our Financial Services Guide for further understanding of the advice offered here and throughout our website.