The first step is knowing how much you can borrow. Your borrowing capacity depends on your income, expenses, existing debts, and credit history. A mortgage broker can assess your situation and give you a realistic picture of what lenders could approve. In addition to reviewing your current income and liabilities, your broker will consider whether you plan to use a cash deposit or equity from an existing property.  

They'll also run different scenarios to ensure your investment loan remains serviceable even during vacancy periods or when rental income fluctuates. They'll assess how much you can afford to spend on repairs or upgrades, and advise on whether an interest-only, fixed, or variable loan suits your strategy. Once your financial situation is clear, your broker can help you get pre-approved for an investment loan, giving you confidence when you start looking at properties.

Investing in property isn’t just about mortgage repayments. There are significant upfront and ongoing costs to consider. These may include stamp duty, legal and conveyancing fees, loan setup fees, pest and building inspections, and possibly lenders mortgage insurance (LMI) if your deposit is under 20%.

Once you own the property, regular costs can include council rates, water charges, strata or body corporate fees, property management fees, landlord insurance, maintenance, repairs, and land tax in some states. If your property is vacant, you’ll still need to cover these costs without rental income, so creating a buffer to cover at least three months of expenses is highly recommended.

It’s easy to underestimate the cost of repairs or upgrades. Whether it’s cosmetic work to boost rental appeal or essential repairs like plumbing or roofing, costs can quickly add up. Always overestimate renovation expenses and build a contingency fund. Renovations can also add to your borrowing power if managed correctly.

Your broker can help assess whether it's worth refinancing or topping up your loan to cover improvements. Just be sure to weigh the expected rental return and potential capital growth against the upfront cost.

When lenders assess your loan application, they factor in projected rental income, but often only at 70 to 80 per cent of the estimated figure to account for vacancy and expenses. Check recent rental listings for similar properties in the area to get a realistic sense of income. Consider the suburb’s vacancy rate and how seasonal factors might impact demand. Some suburbs have high rental turnover or drop in popularity during certain times of the year.