Understand what the bank will lend you
Borrowing capacity, not the deposit alone, sets your ceiling. Income, existing debts, dependants and living costs all feed into it, and lenders assess repayments at a buffer above the current rate.
Talk to a broker before you look at a single listing, so you are shopping inside a real budget rather than a hopeful one.
Run the numbers before you fall in love
Write down every cost on one page: loan repayments, council rates, insurance, strata, property management, maintenance and vacancy. Then subtract that from realistic rent, not the agent's optimistic figure.
- ·Budget the purchase costs, including stamp duty, legals, inspections and lender fees.
- ·Assume some weeks of vacancy every year.
- ·Stress test the repayment at a higher interest rate than today's.
- ·Decide in advance how long you intend to hold it. Property rewards patience and punishes quick exits.
Buy the location, then the property
Long-term demand comes from jobs, transport, schools and supply constraints. A well-located ordinary property has historically outperformed a spectacular property in a weak location, and it is far easier to re-let.
The rocks under this island
Buying near home because it is familiar, skipping building and pest inspections, relying on tax deductions to make a poor deal work, underestimating holding costs, and selling in the first downturn.
Keep going, free
Explore the Residential Investment Property island in The Archipelago
Use the bank's money to buy an asset that grows in value and builds your future. Inside the island you get the full overview, the behavioural rocks to avoid, curated books, podcasts, videos and tools, concrete first steps you can tick off, and Campfire Conversation prompts to ask a parent or grandparent.
The first island is free for anyone. The Handwritten Edition book opens all six.
Common questions
- How much deposit do I need?
- It depends on the lender and whether you are willing to pay lenders mortgage insurance. Speak to a broker about your specific position.
- Should the first property be an investment or a home?
- Both work. The right answer depends on your income stability, how long you plan to stay put, and your local market.
- Where can I see the full checklist?
- The Residential Investment Property island in The Archipelago includes first steps, tools and conversation prompts.