How to Buy an Investment Property in Australia: A Step-by-Step Guide (2026)

House with a for sale sign on the lawn

Quick answer: Start with your budget and borrowing power, then decide between a new build and an established home, because from 1 July 2027 negative gearing on residential property is limited to new builds (properties held at 7:30pm AEST on 12 May 2026 are exempt). Then research the area, budget for stamp duty and ongoing costs, get the contract checked, and keep records from day one.

 

Step 1: Understand the Risks

Moneysmart lists the main risks: the property’s value could fall, leaving you owing more than it’s worth; higher interest rates raise repayments; and you cover the costs yourself when the property is empty. It warns: “Don’t rely on rental income to cover the mortgage – there may be times when your property is empty” (Moneysmart).

 

Step 2: Work Out Your Finance

Lenders test whether you could repay at a higher rate. APRA has set this serviceability buffer at 3 percentage points above the loan rate since 2021 (APRA, May 2026).

From February 2026, banks must limit new loans with a debt-to-income ratio of 6 or more to 20% of new lending, measured separately for investors. Loans to purchase or construct new dwellings are excluded from that cap (APRA).

If you borrow more than 80% of the property’s value you will usually pay lenders mortgage insurance, which protects the lender, not you (Moneysmart).

 

Step 3: Decide Between New and Established

The ATO confirms the 2026 Budget tax changes “are now law”: from 1 July 2027 negative gearing on residential investment property is limited to new builds, properties held at 7:30pm AEST on 12 May 2026 are exempt, and the 50% CGT discount is replaced with cost base indexation and a 30% minimum tax rate for gains accruing after that date (ATO).

For established homes bought after 12 May 2026, losses will only be deductible against other residential property income (Budget factsheet). That makes the new-versus-established decision a tax decision as well as an investment one. See how the changes apply to new builds.

 

Thinking about a new build as your investment?

We’ll check the price, the contract and any commission built in before you sign.

GET MY PACKAGE CHECKED → or call 1300 446 445

 

Step 4: Research the Location

Moneysmart suggests checking growth rates, rental yields and vacancy rates in the area, the property’s features and maintenance costs, any planned zoning changes, and how close it is to schools, shops and transport (Moneysmart). Here’s how to calculate rental yield.

 

Step 5: Budget for Upfront Costs

Upfront costs include stamp duty, conveyancing and legal fees, searches, and pest and building inspections (Moneysmart). Stamp duty and conveyancing can’t be claimed as an immediate tax deduction, though they may form part of the cost base for capital gains tax (ATO).

Use your state revenue office’s transfer duty calculator:

See the full cost breakdown for a house and land package.

 

Step 6: Budget for Ongoing Costs

Ongoing costs include council and water rates, building and landlord insurance, body corporate fees, land tax, property management, repairs and maintenance, and loan repayments, which rise when an interest-only period ends (Moneysmart). Investment properties can attract land tax; check the rules in your state (NSW, VIC, QLD).

Loan interest is deductible while the property is rented or genuinely available for rent, but not for any period it’s used privately (ATO).

 

Step 7: Check the Property and the Contract

A conveyancer or solicitor handles the legal work on the contract, mortgage and related documents (NSW Government). Get a building and pest inspection on an established home, and have a new build’s contract and inclusions checked before you sign.

On a house and land package, also check whether the price includes a commission paid to whoever is selling it to you. Builder commissions can run into tens of thousands of dollars. Here’s how hidden commissions work.

 

Step 8: Settle, Insure and Keep Records

Arrange landlord insurance before tenants move in, and keep every record. The ATO says to keep rental records for 5 years from the latest relevant date, such as when you lodged the return or made your last depreciation claim (ATO). Read our guide to insuring and managing a new investment property.

 

Questions to Ask

  1. How much can I borrow after the 3-percentage-point serviceability buffer, and what will repayments be if rates rise?
  2. Will this property be negatively gearable after 1 July 2027?
  3. What are the stamp duty, land tax and ongoing costs on this property?
  4. What do comparable homes in the area rent for, and what is the vacancy rate?
  5. Is anyone involved in selling me this property paid a commission, and how much?

 

How REIN Helps

REIN acts only for buyers of new house and land packages. We check the price, the contract and any commission built in before you sign.

REIN charges a service fee for our work, agreed in writing before you start. Where REIN receives a builder or developer commission on your purchase, we disclose it and rebate 100% (excluding GST) of it to you. The rebate typically covers the fee and more.

 

Common Questions

How much deposit do I need for an investment property?

It depends on the lender and your situation. Borrowing more than 80% of the property’s value usually means paying lenders mortgage insurance, which protects the lender, not you.

Can I still negatively gear an investment property?

Properties held at 7:30pm AEST on 12 May 2026 keep the current rules. From 1 July 2027, negative gearing for residential property is limited to new builds.

Is it better to buy a new or established investment property?

It depends on your goals and numbers. New builds now have tax advantages after the 2026 changes, but price, location and rent still matter most.

Should I buy an investment property through a seminar?

Moneysmart warns that investment seminars can use high-pressure sales tactics and may include hidden fees and commissions. Get advice from someone who isn’t paid by the seller.

Before you sign anything…

Send us the package. We’ll check the price, any commission built into it and the contract terms, and tell you straight whether it stacks up. Free, no obligation.

GET MY PACKAGE CHECKED → or call 1300 446 445

Written by the REIN Editorial Team. Researched with the help of AI tools, then fact-checked against the sources below. Last updated 6 October 2026.

Reviewed by Scott Fraser, founder of REIN, licensed real estate agent (NSW) with 10 years on the developer side of house and land.

 

More house and land investment guides

Sources

 

About this article: This article is published by Real Estate Investors Network Pty Ltd (REIN). Statements of opinion are ours. If you believe anything in this article is inaccurate or out of date, please call us on 1300 446 445 and we will review it and correct it promptly. This is general information only. It does not take into account your objectives, financial situation or needs, and is not financial, credit, legal or tax advice. Rules differ between states and change over time. Consider seeking independent advice from a licensed professional before acting. A REIN service fee applies to our services, and where REIN receives a builder or developer commission in connection with a client’s purchase, it discloses and rebates 100% (excluding GST) of that commission to the client under its written service agreement.