1. Essential Upfront Costs Before Getting the Keys

How to Get The Deposit When Buying Your First Investment Property

OK, so most of the time, this is the first big hurdle you need to navigate as a property buyer. There are options and a few, depending on your own circumstance.

This is typically your largest upfront expense. Most lenders require at least 20% of the property’s value to avoid Lenders Mortgage Insurance (LMI). So for a $750,000 investment property, you’re looking at $150,000 you’ll need to have ready!

HOWEVER…. If you are already a homeowner? Good news! You have options beyond saving cash.

• Equity release: Tap into the equity in your existing home through refinancing.
• Cross-collateralization: Use your current property as security for the new loan.
• Line of credit: Access equity in your home without refinancing your entire mortgage
• SMSF investment: Use your self-managed super fund (though this comes with strict regulations)
• Property partnerships: Pool resources with family or friends to reach the deposit threshold.

Have you thought about rentvesting to save money? Living with family or friends for minimal (pay your way of course) House sharing?

LMI is also available for deposits under 20%.

My Expert Tip – Don’t let deposit requirements hold you back. Lenders are often more flexible with investors who can demonstrate good income and existing property ownership. If you’re a homeowner with equity, leveraging that equity is typically faster than saving from scratch and gets your investment working for you sooner.

Related post: 4 Simple Ways To Finance Using Equity To Buy Another House, 4 Simple Ways To Finance Using Equity To Buy Another House

Investment Loan Specifics

Investment loans typically come with:

• Higher interest rates (usually 0.5-1% above owner-occupier rates)
• Stricter assessment criteria
• Different loan-to-value ratio requirements

My Expert Tip – Shop around extensively! Rates and policies vary significantly between lenders. A good mortgage broker who specializes in investment loans can be worth their weight in gold, potentially saving you thousands over the life of the loan and can do all the heavy lifting for you to get the loan over the line.

Related post: Best Property Investment Loans: Strategic Structure Guide 2025

Stamp Duty: The Silent Profit-Killer

Now, stamp duty—this is a state government tax on property transactions that varies depending on:

• Which state or territory you’re buying in
• The property’s value
• Whether it’s your first property purchase
• Whether it’s residential or commercial

As an investor, you’ll likely pay full stamp duty rates since concessions generally only apply to owner-occupiers. For example, on a $750,000 investment property, you could pay around $29,000 in NSW or $20,000 in Queensland.

My Expert Tip – Factor stamp duty into your overall return calculations. This significant upfront cost directly impacts your total return and should be spread across your anticipated holding period when calculating your return on investment. Use a simple Stamp Duty Calculator for your state amount.

When Buying An Investment Property, What are the Legal Costs? Conveyancing and Contract Costs

Conveyancing is the legal process of transferring property ownership. For investment properties, this can be slightly more complex due to additional clauses and considerations.

Expect to pay between $1,200-$2,500 for a good property solicitor or conveyancer who will:

• Review the contract of sale with investment-specific considerations.
• Run necessary property and title searches.
• Ensure compliance with investment property regulations.
• Manage settlement processes.
• Advise on the legalities of the ownership structures (individual, joint, company, trust)

My Expert Tip – Find a conveyancer who specializes in investment properties. The extra knowledge about investment-specific clauses and property law can save you headaches down the track.

Entity Setup Costs

Depending on your investment strategy, you might incur costs setting up:

• Company structure: $1,200-$2,000
• Trust establishment: $1,500-$3,000
• SMSF setup (if applicable): $2,000-$4,000
• Legal advice on structure: $500-$1,500

My Expert Tip – Consult with a tax accountant before purchase to determine the optimal ownership structure for your situation. The right structure can save you thousands in tax over the life of your investment. Your Tax accountant will give you tax advice about the structure, your solicitor will give you legal advice about your structure. You will need both to make informed decisions about what will be the best structure for you.

2. Due Diligence: Inspections and Reports

For investment properties, thorough due diligence is even more important since you’re making a business decision, not an emotional one:

• Building inspection: $300-$800
• Pest inspection: $200-$400
• Specialized reports (electrical, structural, etc.): $200-$600 each
• Strata report (for apartments): $300-$500.
• Rental appraisal: $0-$200 (often free from agents)

My Expert Tip – Never skip these inspections! They’re your insurance against buying a money pit. Use inspection findings as negotiation leverage or to calculate accurate future maintenance costs in your investment analysis.

Other Initial Fees to Budget For

Several smaller fees can quickly add up so don’t forget the below to add into your cash flow analysis spread sheet.

• Mortgage registration fee: $100-$200.
• Transfer fee: $100-$1,400.
• Loan application/establishment fee: $0-$800.
• Valuation fee: $0-$500
• Title insurance (optional but recommended): $500-$1,000.

3. Rental Property Setup Costs When Buying Your First Investment Property

Property Management Setup

When buying your first investment property, most first-time investors wisely use a property manager, which involves:

• Management agreement setup fee: $0-$300
• Leasing fee: Usually 1-2 weeks’ rent
• Advertising package: $150-$500
• Rental bond lodgement fee: Varies by state.

My Expert Tip – Interview at least three property managers and compare their full fee structures, not just the headline management percentage. Ask about their average vacancy periods and tenant screening process—these factors ultimately impact your returns more than slight differences in management fees.

Pre-Tenant Property Preparation

Before you can start earning rental income when you buy your first investment property, there are some essential costs you will need to know about:

• Professionally clean the property: $300-$600
• Safety compliance items (smoke alarms, etc.): $200-$500
• Any minor repairs or touch-ups: Variable
• Professional photos for listings: $200-$400
• Keys and security setup: $100-$300

My Expert Tip – Consider a small, strategic renovation before tenanting if it will significantly increase rental returns. Fresh paint and modern flooring often deliver the best ROI for minimal hassle and can justify higher rent.

Minimum Insurance Requirements When Buying Your First Investment Property

Investment properties need specific insurance coverage. This is an investment in your asset so be sure to shop around, read the fine print and ask you Property manager if they have anyone they suggest using.

These insurances would be a minimum to invest in.

• Landlord insurance: $1,000-$2,000 annually (covers tenant damage, rental default)
• Building insurance: $1,200-$3,000 annually
• Liability insurance: Often included in landlord policies.
• Contents insurance (if furnishing the property): $400-$800.

My Expert Tip – Never skimp on landlord insurance! The cost of one bad tenant can dwarf the premium savings. Look for policies with good coverage for malicious damage, rental default, and legal expenses.

4. The Ongoing Ownership Costs Of Buying Your First Investment Property

Regular Property Expenses

These recurring property costs need to be factored into your cash flow calculations:

• Council rates: $1,500-$3,000 annually
• Water rates: $800-$1,600 annually
• Land tax (investment-specific!): Varies by state and portfolio value.
• Strata/body corporate fees (if applicable): $1,500-$10,000+ annually
• Property management fees: 5-12% of rental income
• Regular maintenance: 1% of property value annually (rule of thumb)

My Expert Tip – Create a separate bank account for your investment property and automate transfers to cover these expenses. This helps with budgeting and tax time organization.

Tax and Accounting Costs

When buying your first investment property, it’s important to realise that Investment properties come with additional financial responsibilities:

• Tax accountant fees: $350-$800 annually.
• Quantity surveyor for depreciation schedule: $600-$800 (one-time)
• Bookkeeping software: $0-$300 annually
• Financial advisor consultation: $400-$2,500 annually

My Expert Tip – A good tax accountant specializing in property investment can find deductions you didn’t know existed. Their fee is tax-deductible and usually pays for itself many times over. I will also mention Quantity surveyors are the best money you will spend. They get you the best use of your depreciation, which can be extra money back in your pocket.

Maintenance and Repairs: The Ongoing Reality Of Buying Your First Investment Property

Budget for both expected and unexpected maintenance. If something is going to breakdown or there’s an emergency, it usually happens in 3’s – or does that just happen to me?

• Routine maintenance: 1-2% of property value annually
• Emergency repairs fund: Aim for $2,000-$5,000 set aside.
• Periodic updates (every 7-10 years): 3-5% of property value
• Gardens and grounds maintenance: $1,000-$3,000 annually if applicable

My Expert Tip – Set aside 10% of your rental income for maintenance from day one. It may seem excessive, but maintenance costs aren’t evenly distributed—they tend to come in expensive bursts.

5. Often Overlooked Costs To Do With Buying Your First Investment Property

Vacancy and Tenant Turnover Costs

Even good properties experience vacancies, so when buying your first investment property, start allowing for these sometimes-forgotten costs:

• Rental income loss during vacancies: Average 2-4 weeks per year
• Re-advertising costs: $150-$500 per turnover
• End-of-lease cleaning: $300-$600.
• Minor repairs between tenants: Variable

My Expert Tip – Factor in at least 4% of your annual rental income as vacancy allowance, even in hot rental markets. It’s better to be pleasantly surprised than caught short.

Professional Services Beyond Property Management

As your investment journey begins and you buy your first investment property, you may need:

• Specialized legal advice for tenant issues: $300-$500 per hour.
• Debt collection services: Usually percentage-based
• Renovation project management: 10-20% of project cost
• Building inspection reports for insurance claims: $300-$800
• Valuations for rental, insurance or refinancing purposes = $600-$800

Capital Improvements vs. Repairs

Understanding the difference is crucial for tax purposes:

• Repairs (immediately tax-deductible): Fixing existing issues.
• Capital improvements (depreciated over time): Adding new features or significant upgrades.

My Expert Tip – Keep meticulous records of all property spending, with clear documentation of what constitutes a repair versus an improvement. Photos before and after work is completed are invaluable for tax time.

Tax Benefits and Deductions Of Buying Your First Investment Property

Negative Gearing Benefits

If your property is negatively geared (this is when expenses exceed income) which hopefully it won’t be – don’t forget these elements below:

• Tax losses can offset other income (PAYG or other investments, depending on your structure)
• Can reduce your overall tax bill.
• Consider cash flow impact despite tax benefits.

Depreciation: The Investor’s Secret Weapon

Property investors can claim depreciation on:

• Building structure (see state regulations – ask your accountant)
• Plant and equipment items (varying rates)
• Renovations and improvements

My Expert Tip – Invest in a quality depreciation schedule from a quantity surveyor before your first tax return. This one-time cost of $600-$800 can generate thousands in tax deductions over the property’s life.

Claimable Expenses Breakdown

Almost every cost related to your investment property is tax-deductible. Check with your accountant as these do change from year to year but treat buying your first investment property like a business. Keep records on these costs below for accounting purposes.

• Interest on your investment loan
• Property management fees
• Insurance premiums
• Maintenance and repairs
• Council and water rates
• Travel to inspect your property.
• Accounting fees
• Depreciation

My Expert Tip – Use a dedicated credit card for all investment property expenses to create an automatic paper trail for tax time.

Cash Flow Analysis for New Investors

Calculating True Return When Buying Your First Investment Property

You will need to look beyond just rental yield to understand:

• Cash-on-cash return (annual cash flow divided by total cash invested)
• Internal rate of return (IRR)
• Capital growth potential.
• After-tax return on investment

My Expert Tip – Create a comprehensive spreadsheet that accounts for ALL costs discussed in this article, not just the obvious ones. Many first-time investors overestimate returns by 2-3% by forgetting expenses like vacancy periods and ongoing maintenance.