How to Buy Your First Investment Property in Australia: Step by Step

To buy your first investment property in Australia, work through ten steps in order: set your goal, have the borrowing conversation with a licensed broker or lender, budget every buying and holding cost, check the tax basics, research the area and property type, run the numbers on each shortlisted home, complete due diligence, buy, prepare for settlement, then manage the property and keep records. The order matters because each step narrows the next one.

Want to test a property before you go further? Our cash flow investment calculator sets out the rent, costs and what is left each year in a few minutes.

Key takeaways

• Start with a written goal and time frame. It decides the property type, the area and how much cash flow you need.
• Talk to a licensed mortgage broker or lender before you search. Moneysmart says a broker should appear on ASIC’s Professional Registers.
• Budget for buying costs (stamp duty, conveyancing, inspections) and holding costs (rates, insurance, management, repairs, vacancy).
• The ATO says to keep records from the day you buy until 5 years after you sell. Stamp duty and legal fees on the purchase are not deductible.
• The negative gearing and capital gains tax changes passed into law on 26 June 2026 and start on 1 July 2027. Get tax advice for your situation before you buy.
• Never sign a contract before a conveyancer or solicitor has reviewed it and your building and pest inspection is back.

The 10 steps at a glance

1. Goal: growth, income or a balance, and how long you plan to hold.
2. Borrowing conversation: what a lender will consider, with a licensed broker or lender.
3. Budget: deposit, buying costs, holding costs and a buffer.
4. Tax basics: what is deductible, what goes into the cost base, the 2027 changes.
5. Area and property type: research demand, supply, zoning and the type of home.
6. Numbers: yield and cash flow for every shortlisted property.
7. Due diligence: building and pest, contract review, sales evidence.
8. Buy: offer or auction, knowing the cooling off rules in that state.
9. Settlement: finance approval, insurance, pre settlement inspection, property manager.
10. After the keys: lease, records, yearly review.

Step 1. What is your goal for the first investment property?

Write one sentence before you look at a single listing: what you want the property to do and by when. Some first time investors want long term growth and can carry a cost each year. Others need the rent to cover most of the costs. Most want a balance.

That sentence shapes everything else. A growth goal usually points to land and scarcity. An income goal points to higher rental yield, which often means a different area or property type. Our guide to the best type of investment property for beginners compares houses, units, townhouses, new and established homes.

Step 2. Who should you talk to about borrowing first?

Have the borrowing conversation with a licensed mortgage broker or a lender before you search, so you know what a lender will consider and what paperwork you need. Citadel Agency is not a mortgage broker and does not give credit advice.

Moneysmart says to check a broker on ASIC’s Professional Registers Search, under Credit Representative or Credit Licensee, before you meet. It also notes that brokers must act in your best interests when suggesting a loan, and that most are paid a fee or commission by the lender. Ask how your broker is paid.

Step 3. What costs should you budget for?

The purchase price is only part of the cost. Moneysmart lists the costs to plan for when buying an investment property:

• Buying costs: stamp duty, conveyancing fees, building and pest inspections and loan costs. Estimate duty with our stamp duty calculator and confirm it with the state revenue office.
• Holding costs: council and water rates, body corporate fees for strata, insurance, property management, repairs and maintenance.
• Vacancy: Moneysmart suggests checking that you can cover the costs when the property is empty between tenants.
• Selling costs, later: agent’s fees, advertising, legal costs and possibly capital gains tax.

Our holding costs guide walks through each cost line by line.

Step 4. What tax rules should you check before you buy?

The ATO’s page on what to consider before buying a rental property covers the basics every first time investor should know:

• Records: keep them from the time you buy the property until 5 years after you sell it. Paper or digital both work.
• Purchase costs: stamp duty, legal fees and the loan itself are not deductible. Costs you cannot deduct may form part of the cost base, which can reduce a capital gain when you sell.
• Borrowing expenses: costs such as loan establishment fees and lenders mortgage insurance are generally claimed over 5 years, or the loan term if shorter.
• Initial repairs: fixing damage that existed when you bought is a capital cost, not an immediate deduction.

The law has also changed. The ATO’s legislation tracker shows the negative gearing and capital gains tax changes received Royal Assent on 26 June 2026, with a start date of 1 July 2027. A separate bill with the definition of a new residential dwelling was introduced on 14 October 2026 and had not passed when we checked. Our negative gearing changes 2027 guide explains what passed. Speak to a registered tax agent about how the rules apply to you.

Step 5. How do you choose the area and property type?

Moneysmart suggests looking at an area’s potential for growth, rental yield, vacancy rates and any planned zoning or planning changes, then at the property’s features and likely maintenance costs. In practice that means checking:

• Who rents in the area and what they look for (bedrooms, parking, transport, schools).
• How much new supply is coming, from council planning and building approvals.
• Zoning and overlays on the specific lot, such as flood or heritage controls.
• Whether the property type suits your goal: land content, strata fees and upkeep differ a lot between a house and a unit.

Our step by step guide on how to analyse a suburb covers where to find each of these figures. If you are weighing a unit, read how to buy a unit first. We do not pick suburbs for readers: the right area depends on your goal and budget.

Step 6. How do you run the numbers on a shortlist?

For each property on your shortlist, work out three things before you make an offer:

• Gross rental yield: annual rent divided by the price. Use our rental yield calculator.
• Net cash flow: rent minus every holding cost, before and after tax. The cash flow calculator does this.
• Buffer: how long you could cover the costs with no tenant.

Check the rent figure against recent leases for similar homes, not only the agent’s appraisal.

Step 7. What due diligence should you do before signing?

• Get a building and pest inspection from a qualified inspector. Read what to do if a property fails its building and pest inspection.
• Have a conveyancer or solicitor review the contract and the seller’s disclosure documents before you sign.
• Compare recent sales of similar homes nearby to judge the price.
• Confirm insurance is available at a cost that fits your numbers.

Our due diligence checklist lists the checks a buyers agent runs on every property.

Step 8. How do you make the purchase?

You will buy by private treaty (an offer) or at auction. Cooling off rules differ by state and may not apply at auction, so know the rules where you are buying before you bid or sign. Our guide to cooling off periods in each state sets them out.

Set your top price from your numbers in Step 6, not on the day.

Step 9. What happens between signing and settlement?

• Your lender completes formal approval and the valuation.
• Arrange building insurance and consider landlord insurance, as Moneysmart suggests.
• Book a pre settlement inspection.
• Choose a property manager, or plan how you will manage it yourself, so the property can be leased soon after settlement.

Read what happens between signing and settlement for the full timeline.

Step 10. What should you do after you get the keys?

Lease the property, set up a folder for every receipt, statement and invoice, and review the property each year: rent against the market, costs, insurance and whether it still fits your goal. Good records make tax time simpler and support the cost base when you eventually sell.

Who does what when you buy an investment property?

• Mortgage broker or lender: the loan. Check the licence on ASIC’s registers.
• Conveyancer or solicitor: the contract, searches and settlement.
• Building and pest inspector: the condition of the property.
• Registered tax agent or accountant: ownership structure, deductions and the 2027 changes.
• Property manager: leasing, rent and repairs after settlement.
• Buyers agent (optional): the search, due diligence and negotiation, acting only for the buyer.

Moneysmart warns to be wary of advice from providers who may refer each other’s services. Ask every professional how they are paid and whether they receive referral fees.

How Citadel runs the search step for first time investors

Citadel Agency is a licensed buyers agency (licence 092247L) that has helped hundreds of Australian families buy investment properties tailored to their plans. Across the purchases on our results page, 88% were secured off market or pre market, the average gross rental yield is 5.3% and the average purchase price is about $525K. Those are past results, not a forecast for any property.

For a first investment property, we start with the goal from Step 1, agree the property type and areas that fit it, then run Steps 6 and 7 on every property before an offer is made. Read more on property investment with a buyers agent, or book a free strategy call on our contact page.

FAQ

How long does it take to buy a first investment property?

It depends on your finance, the market and how fast you can make decisions. The search and due diligence usually take the longest. Settlement periods are set in the contract.

Do I need a mortgage broker to buy an investment property?

No. You can go to a lender directly or use a broker. If you use a broker, Moneysmart says to check that they are on ASIC’s Professional Registers before you meet.

Can I claim stamp duty on an investment property as a tax deduction?

No. The ATO says stamp duty and legal fees on the purchase are not deductible. Costs you cannot deduct may form part of the cost base for capital gains tax.

When do the negative gearing changes start?

The ATO lists a start date of 1 July 2027 for the changes, which received Royal Assent on 26 June 2026. Get tax advice for your own situation.

Should my first investment property be a house or a unit?

It depends on your goal and budget. Houses usually carry more land and no strata fees; units can cost less to buy and maintain. Our beginners guide compares the options.

Sources

• Moneysmart: Buying an investment property
• Moneysmart: Using a mortgage broker
• ATO: What to consider before buying a rental property (last updated 24 March 2026)
• ATO: Latest news on tax law and policy (last updated 9 November 2026)
• Treasurer: Tax reform for a fairer tax system, 14 October 2026

General information only. It does not take into account your objectives, financial situation or needs. Speak to a qualified professional before acting.

General information only. It does not take your objectives, financial situation or needs into account and is not financial, tax, credit or legal advice.