Learning how to start investing in property in Australia is one of the most financially impactful decisions you can make. Australian property has generated long-term wealth for millions of investors over decades — but knowing where to start investing in property can feel overwhelming. This step-by-step guide cuts through the noise and gives you a clear, practical roadmap to start investing in property Australia with confidence, whether you’re earning $70,000 a year or $200,000.
Why Start Investing in Property in Australia?
Before you decide to start investing in property, it’s worth understanding why property has been such a reliable wealth creator in Australia. Three structural factors make Australian property unique: strong population growth driven by immigration and natural increase, a persistent undersupply of housing relative to demand particularly in major cities, and a tax system that actively incentivises property investment through negative gearing and depreciation deductions. These factors have underpinned consistent long-term price growth across Australian capitals, making the decision to start investing in property here one of the most well-supported investment choices available.
Property also offers something shares and other investments don’t: leverage. When you start investing in property, you can typically borrow 80-90% of the purchase price. This means a $100,000 deposit can control a $500,000-$1,000,000 asset. If that asset grows at 7% per year, you’re earning $35,000-$70,000 in capital growth on a $100,000 investment — a return that dramatically outpaces what most other investments offer on an equivalent cash outlay.
Step-by-Step: How to Start Investing in Property Australia
Most successful investors follow a clear sequence when they start investing in property. Skipping steps — particularly the financial preparation phase — is the most common cause of problems for new investors. Here is the full roadmap:
Step 1: What Deposit Do You Need to Start Investing in Property?
The deposit question is often the first barrier people face when they want to start investing in property. The minimum deposit for an investment property is generally 10-20% of the purchase price, plus purchase costs (stamp duty, conveyancing, building inspections). For a $600,000 property, you’d need $60,000-$120,000 deposit plus approximately $25,000-$35,000 in purchase costs — so $85,000-$155,000 in total upfront funds.
If you’re trying to start investing in property without a large cash deposit, there are legitimate strategies. Equity in an existing owner-occupied home is the most common path — many investors use equity in their own home as security for their first investment property, without needing additional cash savings. First home buyers in some states can also use the First Home Guarantee to purchase with a 5% deposit and avoid Lender’s Mortgage Insurance (LMI), freeing up capital to start investing in property sooner.
Deposit Sources to Start Investing in Property
- 1.Cash savings — the straightforward path, typically 6-24 months of disciplined saving
- 2.Equity in existing home — use a home equity loan to access your property’s usable equity
- 3.Gifted deposit from family — allowed by most lenders, though terms vary
- 4.First Home Guarantee (FHBG) — buy with 5% deposit, government guarantees remaining LMI
- 5.Self-managed super fund (SMSF) — invest in property via superannuation (strict rules apply)
- 6.Parental guarantor — a parent’s property acts as additional security, reducing cash needed
What Is Stamp Duty When You Start Investing in Property?
Stamp duty is one of the most significant upfront costs when you start investing in property in Australia. It’s a state-levied tax on the purchase of property and is calculated as a percentage of the purchase price. The rate varies by state and by buyer type — first home buyers in most states receive concessions or full exemptions on owner-occupied homes up to a certain price, but these typically do NOT apply to investment properties. When you start investing in property as an investor, you pay full investor stamp duty rates.
As a rough guide, stamp duty on a $600,000 investment property ranges from approximately $17,000 (Queensland) to $31,000 (Victoria) depending on the state. These amounts must be paid at settlement, so they need to be factored into your upfront cash requirements before you start investing in property. Use your state revenue office’s stamp duty calculator for an exact figure on any specific property.
Choosing the Right Loan Structure to Start Investing in Property
Your loan structure has a significant impact on your cash flow and tax position when you start investing in property. The key decisions are: interest only vs principal and interest, fixed vs variable rate, and how the loan is structured relative to any owner-occupied debt you have.
Most accountants recommend keeping investment loans interest-only for the first 5 years when you start investing in property, for two reasons: first, interest payments are fully tax deductible, while principal repayments are not; second, the lower repayments on an interest-only loan improve cash flow during the early years of holding. Meanwhile, any surplus cash should be directed into an offset account on your owner-occupied home loan, where the interest saved is not tax deductible but the debt reduction is still beneficial.
Building Your Team Before You Start Investing in Property
The people around you have an enormous impact on your outcomes when you start investing in property. Unlike buying a home (where you primarily need a conveyancer and a mortgage), investment property requires a broader team of specialists who each contribute to your financial result.
The Investor’s Team: Who You Need
- 1.Mortgage broker (investor specialist) — finds the right lender and loan structure for your situation
- 2.Accountant (property investment experience) — optimises tax position, manages depreciation, advises on structure
- 3.Conveyancer or property solicitor — handles the legal transfer of property ownership at purchase
- 4.Buyer’s agent (optional but powerful) — sources off-market properties, negotiates, saves time
- 5.Property manager — manages tenants, rent collection, maintenance, and compliance on your behalf
- 6.Quantity surveyor — prepares tax depreciation schedule to maximise deductions from day one
- 7.Landlord insurance provider — essential protection from day of settlement
Common Mistakes When You Start Investing in Property
Knowing what to avoid is just as important as knowing what to do when you start investing in property. The most costly mistakes made by new investors in Australia are consistent and preventable.
Buying emotionally. Investment properties should be chosen with numbers, not feelings. The suburb you love to live in may not be the best place to invest. When you start investing in property, separate your lifestyle preferences from your investment decisions completely.
Not stress testing the numbers. Model your cash flow at interest rates 2-3% higher than current before committing. Many investors who started investing in property in 2021 at 2% rates struggled when rates rose to 6% in 2023-24. Know your worst-case scenario before you sign.
Skipping the building inspection. A pre-purchase building and pest inspection costs $400-$600 and can save you tens of thousands. Never start investing in property without one on any established building.
Underestimating ongoing costs. Factor in property management fees (7-10%), maintenance (1-1.5% of value annually), council rates, water, insurance, and vacancy periods. Many new investors budget only for the mortgage and are shocked by the total cost.
Your First Property: What to Buy
When you start investing in property for the first time, simpler is better. A standard 3-bedroom house or townhouse in a suburb with broad tenant appeal is less risky than niche property types (student accommodation, serviced apartments, commercial) that have more complex management and financing requirements. Houses offer stronger long-term capital growth due to the land component; units and apartments offer higher yields and lower entry prices. For most people starting their investment journey, a 3-bed house in a growth corridor or a well-located 2-bed apartment near transport represents a solid first step.
For more guidance on specific strategies, see our related guides: positive cash flow property, negative gearing in Australia, rentvesting, and how much you can borrow. The ASIC MoneySmart property guide and ATO rental property guide are essential reading before you start investing in property for the first time.
One Property at a time
Brick by Brick 🧱
General Advice Warning: This article is general in nature and does not constitute personal financial advice. Please consult a licensed financial adviser before making investment decisions.