📚 Property Investment Fundamentals

Master the essentials of Australian property investing with our comprehensive guide

New to property investing? Here's what you need to know to make informed decisions.

🏠 Key Investment Metrics

Rental Yield: Annual rental income ÷ property price × 100. Good yields in Australia are 4-6%+
LVR (Loan-to-Value Ratio): Loan amount ÷ property value × 100. Under 80% avoids LMI
Cash Flow: Rental income minus all expenses. Positive = property pays for itself
Capital Growth: Property value increases over time. Australian average: 6-7% per year

💰 Understanding Investment Returns

Total Return = Capital Growth + Cash Flow

Property investing generates wealth through both property value increases and rental income over time.

Leverage Amplifies Returns

Using borrowed money (mortgage) means a 6% property growth on a $750k property with $150k deposit gives you 30% return on your cash invested.

Tax Benefits (Negative Gearing)

If property expenses exceed rental income, you may claim tax deductions on the loss.

⚠️ Key Risks to Consider

Market Risk: Property values can fall, especially in economic downturns
Interest Rate Risk: Rising rates increase mortgage costs and reduce cash flow
Vacancy Risk: Periods without tenants mean no rental income but ongoing expenses
Liquidity Risk: Property can't be sold as quickly as shares or other assets

🎯 Investment Strategy Tips

Location, Location, Location: Buy in areas with strong fundamentals - population growth, infrastructure, employment
Start Conservative: Begin with 20%+ deposit to avoid LMI and reduce risk
Budget for Vacancies: Assume 2-4 weeks vacancy per year when calculating cash flow
Professional Advice: Consult mortgage brokers, buyers agents, and tax accountants

📊 Australian Market Context

Historical Performance: Australian property has averaged 6-7% annual growth over decades
Stamp Duty Varies: Each state has different rates - NSW and VIC are highest
First Home Buyer Benefits: Many states offer stamp duty concessions
LMI Threshold: Most lenders require LMI when borrowing more than 80% of property value

🏦 Financing Options Explained

Principal & Interest (P&I): Pay down loan principal and interest. Builds equity faster.
Interest Only (IO): Pay only interest for 1-10 years. Maximizes cash flow and tax deductions.
100%+ Financing: Borrow full purchase price plus costs. Higher risk but maximum leverage.
Fixed vs Variable: Fixed rates provide certainty, variable rates may be lower initially.

Ready to Apply What You've Learned?

Use our free property analysis calculator to see how these fundamentals apply to your specific investment scenario.

Analyze Your Property

⚖️ Important Disclaimer

This information is for educational purposes only and should not be considered financial advice. Property investment carries risks including potential losses. Past performance does not guarantee future results. Always consult qualified professionals including mortgage brokers, financial advisers, tax accountants, and solicitors before making investment decisions. Consider your personal financial situation, investment objectives, and risk tolerance.