1. Decide what the property has to do
Replace a portion of income? Build equity to fund a second purchase? Provide long-term retirement security? The goal determines the strategy, and the strategy determines the property. Skipping this step is why many first purchases end up as one-off buys rather than the start of a portfolio.
2. Know your three numbers
- Borrowing capacity, confirmed by a broker or lender
- Available funds: deposit plus stamp duty, conveyancing, lender fees, inspections and a buffer
- Monthly holding cost after rent, and how long you could carry it through vacancy or a rate rise
3. Get finance ready
Lenders look at income stability, existing debts, credit card limits (not balances), living expenses and dependants. Reducing unused limits and cleaning up small debts before applying can meaningfully change your capacity. Pre-approval also tells you what is realistic before you fall in love with something.
4. Pick a strategy, then a property type
Cash-flow-focused buyers look for yield that reduces the holding burden. Growth-focused buyers accept a shortfall in exchange for equity. New and off-the-plan stock adds depreciation benefits and lower early maintenance; established stock can offer land value and renovation upside. Neither is universally better - they suit different plans.
5. Research the location properly
- Who rents here, and what do they want to rent?
- What is the vacancy rate and how fast do rentals lease?
- How much comparable stock is coming to market?
- What is driving people into the area over the next decade?
6. Due diligence before you sign
- Independent contract review by your conveyancer or solicitor
- Building and pest inspection for established property
- Owners corporation fees, budget and any planned special levies
- Comparable recent sales and realistic rental appraisals
- Insurance, including landlord cover
7. Settle, then set it up to run
Appoint a property manager, get a depreciation schedule prepared where it applies, keep records for tax time, and diarise a review of the loan and rent each year. A portfolio grows because each property is managed, not just bought.
Keep reading
Next, look at the Melbourne property investment guide for market-specific detail, the off the plan guide if you are considering new stock, or the FAQs for quick answers.
This is general information, not financial or tax advice. Speak with a licensed adviser, broker or accountant about your own circumstances.