I am a huge believer in long term wealth. What do I mean by this? I mean wealth or money flow that sustains with minimum risk. And I trust that only multiple streams of income can provide that.
I say this with sheer confidence that investing in property is one of Australia’s most trusted and time-tested ways to build long term wealth.
From generating rental income to benefitting from capital growth, real estate offers a tangible and potentially lucrative asset class for savvy investors.
However, let us not forget something important. Before the financial rewards come, the financial hurdles—mainly, securing the right loan.
Are you facing issues with this? Well, you’re in luck! Just a while ago, I was exploring how to get started or wondering how to get a loan for an investment property.
I was a little confused too, initially. However, I soon realized that the process isn’t as daunting as it may seem.
Moreover, if you have expert guidance and a smart strategy in place, voila! You’re all set.
This guide covers the essentials of financing your first (or next) investment property and outlines how to structure your loan for long term wealth creation.
Why Real Estate Remains a Strong Wealth-Building Tool?
Real estate investing offers several distinct advantages:
- Leverage: Use borrowed funds to control a larger asset
- Rental yield: Generate consistent cash flow from tenants
- Tax benefits: Claim deductions on interest, depreciation, and more
- Capital growth: Watch your property increase in value over time
- Equity building: Grow your net worth as the loan is paid down
I have witnessed this myself that in a well-researched location and with the right property type, real estate can generate a reliable income stream while appreciating, even during market cycles.
What Are The Important Factors To Keep In Mind Before Investing In Real Estate For Long Term Wealth?
These factors worked wonders for me; they will work out for you, too. These are the factors you should keep in mind before you start investing in real estate properties in Australia.
1. Assess Your Financial Readiness
Before speaking to a lender or broker, take a clear-eyed look at your current financial position. Lenders will assess:
- Your income (including rental income from existing properties)
- Current expenses and liabilities
- Credit score and repayment history
- Existing home equity or cash for a deposit
- Employment stability
A general rule of thumb is to have at least a 10–20% deposit for the property plus extra for costs like:
- Stamp duty
- Legal fees
- Potential renovations
2. Understand Your Loan Options
There are several loan structures suited to investment property purchases. These include:
| Interest-Only Loans | Principal & Interest Loans | Fixed Vs. Variable Rates |
| Lower repayments initially (only interest is paid) Can improve short-term cash flow Common for investors planning to sell within 5–10 years or focus on capital growth | Higher monthly repayments Builds equity faster Preferred by risk-averse investors or those looking for long-term ownership | Fixed: Stability in repayments, helpful for budgeting Variable: More flexibility, especially if you want to make extra repayments or refinance |
My property investment broker helped me identify the best structure based on my goals, and yours can too, whether you’re prioritising:
- Yield
- Capital growth
- Tax efficiency
3. Know Your Deposit And Equity Options
Cash Deposit:
- Generally, as I have seen till now, you’ll need at least a 10% deposit. Although 20% helps you avoid Lender’s Mortgage Insurance (LMI).
- I would also say that having savings or a cash buffer reassures lenders of your financial resilience.
Using Equity:
- If you already own a home or another property, you may be able to use the equity in that asset as your deposit.
- This involves refinancing your current loan and accessing a portion of the value increase.
Example:
I have a home valued at $800,000, and I owe $500,000; I may be able to use part of the $300,000 equity to fund my next purchase.
4. Be Prepared For Investment Lending Criteria
Lenders often apply stricter assessment rules to investment loans compared to owner-occupied loans. Be prepared for:
- Higher interest rates
- Lower loan-to-value ratios (LVRs)
- Tighter income verification (especially for self-employed borrowers)
- Proof of positive rental yield or realistic rental appraisal
What I know is that showing the rental income will cover a significant portion of the loan. Furthermore, it can strengthen your application and boost your borrowing capacity.
5. Maximise Tax Benefits Legally
Owning an investment property can unlock a range of tax deductions:
- Loan interest
- Depreciation on building and assets
- Property management fees
- Repairs, insurance, and maintenance
- Council rates and utilities (when not covered by tenants)
Do What I Did: Speak to a property-savvy accountant to set up the right structure, and also consider using a trust or self-managed super fund (SMSF) if you’re investing through one.
6. Partner With A Property Investment Broker
Financing investment property is not a one-size-fits-all scenario. A specialist broker, like the team at Loanscope, can:
- Compare multiple lenders’ offers
- Help structure your loan for optimal tax and cash flow outcomes
- Guide you through equity release or multi-loan strategies
- Ensure you’re not over-leveraging or underutilised your borrowing power
If you choose to work with a broker, like I did, it will:
- Save time
- Reduce stress
- Increase your chances of approval
This is especially true if you’re self-employed or have complex income streams.
7. Plan For Ongoing Costs And Contingencies
Don’t just budget for the purchase—factor in the real cost of property ownership. Include:
- Property management fees
- Landlord insurance
- Maintenance and repair buffer
- Vacancy periods between tenants
- Rate rises (especially on variable rate loans)
Having a contingency fund (typically 3–6 months of expenses) will protect your investment and peace of mind.
Is Earning Long Term Wealth Possible Through Investing In Real Estate?
As I said at the beginning of this article, obtaining a loan for an investment property is a strategic step toward building long term wealth.
Still, I would emphasise that it requires careful preparation, expert advice, and a clear understanding of your long-term financial objectives.
Moreover, when I first decided to go for it, I had to choose the right loan structure to manage cash flow and tax efficiency.
Therefore, every decision plays a role in your success as a property investor.
However, I was lucky to have the right approach and support from experienced professionals like Loanscope.
Furthermore, you can confidently enter the property investment market and start growing your wealth through real estate.
Whether it’s your first investment or your fifth, smart financing is where lasting wealth begins.
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