What Is Property Investment?

Property investment involves purchasing real estate with the intention of generating returns through rental income, capital growth, or both. Common investment property types in Australia include houses, apartments, townhouses and units.

Property investment carries risks including market fluctuations, vacancy periods, interest rate changes and unexpected expenses. Returns are not guaranteed. Seek independent financial, tax and legal advice before investing.

Key Steps for First-Time Property Investors

The following steps provide a general framework for approaching property investment:

Define your investment goals
Understand your budget and borrowing capacity
Research suburbs and property types
Build your professional team
Conduct due diligence on specific properties
Make an offer and manage settlement

1. Define Your Property Investment Goals

Common investment objectives include:

Capital growth: Property value increasing over time
Rental income: Ongoing income from tenants
Tax benefits: Depreciation and deductions (consult a tax adviser)
Portfolio diversification: Adding property to existing investments

Your goals influence property type, location and timeframe. A financial adviser can help clarify goals based on your situation.

2. Understand Your Budget and Borrowing Capacity

Key budget considerations for property investors include:

Cost Category	Description
Deposit	Typically 10-20% of purchase price
Borrowing capacity	Based on income, expenses and existing debts
Purchase costs	Stamp duty, legal fees, inspections, loan fees
Ongoing costs	Rates, insurance, maintenance, property management
Buffer funds	Reserves for vacancy periods or unexpected expenses

Speak to a mortgage broker about borrowing options and a financial adviser about overall suitability. See Buyers Agent Fees for information on buyers agent costs.

3. Research Suburbs and Property Locations

Factors investors commonly research when evaluating locations:

Transport and infrastructure access
Proximity to employment centres
Local amenities (schools, shops, healthcare)
Rental demand and vacancy rates
Historical price data (past performance is not a reliable indicator)
New developments and supply factors
Zoning and future planning considerations

For Sydney locations, see our area guides including Western Sydney, South West Sydney and Affordable Sydney Suburbs.

4. Build Your Professional Team

Property investors typically work with several professionals:

Professional	Role
Mortgage Broker	Borrowing capacity, loan comparison, finance arrangement
Financial Adviser	Assessing suitability for your financial situation
Accountant / Tax Adviser	Tax implications, ownership structures, depreciation
Solicitor / Conveyancer	Contract review, legal advice, settlement
Building Inspector	Property condition assessment
Buyers Agent	Property search, research, negotiation assistance
Property Manager	Tenant management, rent collection, maintenance

A buyers agent in Sydney can assist with property search and negotiation. Their use is optional and depends on your experience, time and budget.

5. Conduct Property Due Diligence

Before making an offer, due diligence typically includes:

Physical property inspection
Building and pest inspection
Contract review by solicitor
Strata report (for units and townhouses)
Comparable sales research
Rental appraisal from property managers
Zoning and planning checks with council
Flood and bushfire risk assessment

See our Property Buyer Checklist for a comprehensive list of items to review.

6. Making an Offer and Managing Settlement

Key stages in the purchase process:

Submit offer through selling agent or buyers agent
Exchange contracts and pay deposit once terms agreed
Cooling-off period applies for private sales in NSW (5 business days)
Obtain formal finance approval
Settlement typically 4-6 weeks after exchange
Arrange property management if not self-managing

For sale method comparisons, see Auction vs Private Sale.

Common Mistakes First-Time Investors Make

Issues that first-time property investors may encounter:

Underestimating total costs including stamp duty and ongoing expenses
Not maintaining adequate cash reserves for vacancies
Buying based on emotion rather than research
Skipping building and pest inspections
Not obtaining independent financial and legal advice
Overcommitting financially without buffer funds
Failing to research rental demand in the area

Frequently Asked Questions

How much deposit do I need for an investment property?

Most lenders require 10-20% of the purchase price. Less than 20% may require Lenders Mortgage Insurance (LMI). Speak to a mortgage broker for your specific situation.

Is property investment risky?

Yes. Risks include market fluctuations, interest rate changes, vacancy periods and unexpected costs. Property values can fall. Seek independent financial advice before investing.

Should first-time investors use a buyers agent?

A buyers agent can assist with search, research and negotiation. Whether to use one depends on your experience, time and budget. See buyers agent fees for cost information.

What is negative gearing?

Negative gearing occurs when rental income is less than property expenses. The loss may be deductible against other income. Consult a tax adviser for your specific situation.

How do I find affordable investment properties in Sydney?

Consider outer suburbs and growth corridors. Areas in Western Sydney and South West Sydney typically have lower entry prices than inner suburbs.

Considering Property Investment in Sydney?

Iconic Assets provides buyers agent services for investors across Sydney. We can assist with property search, inspections and negotiation. We recommend you also seek independent financial, tax and legal advice before investing.

General Information Only: This page provides general information only. It is not financial, legal, tax or investment advice.

No Guarantee: Property investment involves risk. Property values can fall. Returns are not guaranteed.

Seek Professional Advice: Consult a financial adviser, tax adviser and solicitor before purchasing property.

Beginner's Guide to Property Investment