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Getting started in investment property.
Investing in residential property requires careful consideration and isn't for everyone but it's an option that can offer significant benefits.
Benefits.
- A bricks and mortar investment with rental income.
- Leave a nest egg for your family.
- Provide cashflow to help fund part of your retirement.
- Use the equity in your current property to help you get your next one.
Things to consider.
Pros and cons
Circumstances differ for everyone but here are some of the key advantages and risks of investing in residential property.
| Advantages | Risks |
| You could get rental income which could cover your mortgage repayments or a large part of them. | Unexpected expenses such as maintenance/wear and tear, an untenanted property or an increase in insurance premiums or rates. |
| Some expenses may be deductible against your taxable rental income. | Interest rates could rise, increasing your costs and reducing the money you're making from the property. |
| You could make capital gains as the value of the property increases. | Initially, there may be little or no profit from rent after expenses. Property investment is often about long-term profit. Rules around the potential taxation of capital gains can be complicated. We recommend you always speak to your tax adviser when you buy or sell an investment property. |
| You could use equity in your existing property to purchase your investment property. | The value of your property may not increase, depending on the market. |
| It's a 'bricks and mortar' investment so you have something tangible to show for your money. | If you need to sell, it may take some time, plus you could make a loss on the sale. If you are unsure of the tax treatment of investing in residential property, you should seek advice from a tax professional. |
| With increased debt held against your home, a change in circumstances may make it more difficult to repay your loans. |
There will also be tax implications from investing in residential property. We strongly advise that you always speak with an independent tax adviser before you invest in residential property.
Can I afford it?
Property investment could cost less than you think. Crunching the numbers is a huge part of the process and making the investment a success. Calculate your budget by working out:
1. How much equity you have in your existing home.
2. How much money you have saved.
3. The costs involved with investing.
4. How much you need to borrow.
5. What rental income you would be able to receive for a property within your price range to help cover your expenses.
Get help with this process by talking to one of our Home Loan Experts.
Ongoing costs
When working out if you can afford to buy an investment property, consider the ongoing costs - such as loan interest (including any applicable low equity margins), property management fees (if you don't manage the property yourself), property insurance, insurance for yourself, repairs, maintenance and council rates. Take a look at the potential costs on the 'Do the maths' page.
Achieving your goal
Before investing in property, consider the goal you want to achieve. It could be:
- To set yourself up for a longer term goal or retirement
- To pass a property down to your kids while making money in the meantime
- To generate an income from the property today or in the future
- To make gains in the short term or long term.
Once you've done your initial research and have a goal in mind, talk to a range of experts you trust about the best way to achieve it. This could include a Home Loan Expert, your lawyer, your accountant, a financial adviser and a trusted real estate agent.
Calculators.
Get in touch.
Meet with an expert
Our Home Loan Experts can come to you, when it suits you best.
Apply online.
Existing customers can apply for a home loan via Westpac One® online banking.
Things you should know.
The material on this webpage is provided for information purposes only and is not a recommendation or opinion in relation to property investments or home loans. The information on this webpage does not take your particular financial situation or goals into account.
Interest rates are subject to change without notice. Westpac's home loan lending criteria, terms and conditions apply. A low equity margin may apply.