The 2026 caveat. The Federal Budget announced a proposal to change negative gearing from 1 July 2027 for established residential acquired after 12 May 2026. It is not law until legislated. The reforms change the modelled tax position by acquisition date and structure; your accountant advises on timing and structure. Full detail in the reforms article. This piece assumes you have read that one.
Step 1. What can you actually borrow
Before anything else, know your borrowing power. Not what you think you can borrow. What a bank will actually lend you. A mortgage broker can compare lenders and confirm what a lender will allow.
Two numbers matter:
- Maximum loan amount. Combined household income after tax minus living expenses minus existing debt payments, capitalised at a stress-tested rate (usually actual rate + 3%).
- Maximum LVR. Typically 80% without LMI, 90% with LMI. Many investors borrow at or below 80% LVR to avoid lender’s mortgage insurance. Your broker confirms options.
Real example: dual-income $215k household
This is illustrative. Your broker will run the actual numbers on the actual policies of the actual lender best suited to your position.
Step 2. Deposit + costs = what you need saved
A $550k loan at 80% LVR means a $687k purchase. That means $137k deposit + acquisition costs of roughly $35-45k depending on state.
Real example: $687k purchase, VIC
Stamp duty varies significantly by state. Stamp duty varies by state; see the stamp duty article for the schedule at $700,000.
Step 3. Choose the type + area
Two decisions, in this order.
Asset type
For a first-time investor, the default answer is a stand-alone house on a decent land component, in a growth corridor of a capital city or major regional centre. Reasoning:
- Houses carry more land content, which has historically accounted for a large share of capital growth in many markets; past growth does not predict future growth
- Depreciation is smaller than units (less plant & equipment) but growth compensates
- Rentability is broader (families, professionals, sharehousers)
- Refurbishment options are broader when it comes time to add value
Units and townhouses have a place, particularly in high-yield tight-supply areas. Houses carry more land content; units carry different costs (strata) and depreciation. The model shows both.
Area
James’s view, as a buyers agent: many investors look beyond their own suburb to widen the market they can compare. Past outperformance of any area does not predict future growth.
Research checklist:
What good research looks like
StratMap area coverage. The free tracker gives you filter-and-compare access to 8,000+ Australian suburbs with investment-grade data. Sort by any of the criteria above, cross-check against LGA-level fundamentals. The tracker filters suburbs against the thresholds in your brief. It is not a substitute for due diligence.
Step 4. DD before you sign
Due diligence for a first purchase in 4 headings:
Property DD
- Pest inspection (~$300)
- Building inspection (~$400)
- Strata inspection if applicable (~$300)
- Site visit (yourself or a buyers agent, essential)
- Rental appraisal from a local property manager (free)
Legal DD
- Contract review by conveyancer or solicitor (~$1500-2500)
- Title search + easements + covenants (in contract)
- Zoning check + planning overlays
- Flood, bushfire, and heritage overlays
Financial DD
- Formal loan pre-approval (before making offers)
- Confirm stamp duty calculation for the state
- Confirm land tax exposure (annual, state-specific)
- Enter insurance costs (quotes from your insurer or broker)
Market DD
- 3 comparable sales in last 90 days (same street or 500m radius, similar spec)
- Current listings in area (what's competition)
- Rental comparables (what tenants are actually paying)
- Vacancy trend last 12 months
Step 5. Loan structure
Interest only and principal and interest loans have different cash flow and repayment profiles. The model shows both. Points often raised with a broker:
- Interest-only repayments are lower than principal and interest in the early years; the model shows both. Which loan type suits you is for your broker
- How each loan type affects assessed borrowing capacity depends on the lender
- Interest deductibility depends on your circumstances (accountant confirms)
- Principal and interest repayments reduce the loan balance over time in the model
Rates change; your broker confirms current rates and the fixed versus variable options available to you.
Step 6. Ownership structure (a question for your accountant and solicitor)
Ownership structure (personal names, joint tenants, tenants in common, trust or company) changes the tax and legal position. Which suits you is for your accountant and solicitor; the model shows the numbers for the structure you enter.
Considerations for the split:
- Deductions and income follow legal ownership shares (the ATO co-ownership rule); an accountant confirms
Reform interaction. As announced, from 1 July 2027 losses on established residential acquired after 12 May 2026 would only offset property or investment income. This is a proposal, not law. The ownership share determines how income and deductions are split under the ATO co-ownership rule; the model shows the numbers for the shares entered, and your accountant and solicitor advise on structure before buying, especially if you plan to hold long-term.
Step 7. Settlement + tenant + property manager
Between contract exchange and settlement (typically 30-45 days), organise:
- Insurance in place from settlement day
- Property manager appointed (Rethink recommends 3 quotes)
- Marketing photos taken
- Rental listing live 2 weeks before settlement (finding a tenant to move in day 1)
Good property managers cost 7-9% of rent. Bad ones cost you months of vacancy and tenant nightmares. Ask for 3 references. Check them.
Step 8. Add to the tracker + model forward
Once settled, add the property to the tracker. Model forward. See what property 2 looks like in 2 years, and property 3 by year 4-5.
This is where the tracker earns its keep for first-timers. Not on the first purchase (you can shepherd yourself through that with good advisers). It earns its keep by showing you what property 2 looks like before you buy property 1, so you don't accidentally buy a property that closes off future moves.
What most first-timers get wrong
- Buying in their own suburb. Emotional decision. Almost never mathematically optimal.
- Buying too close to their PPOR. Same market cycle, no diversification.
- Chasing yield without land. A high-yielding regional unit block is not the same asset as a modest-yield capital-city house on 500sqm.
- Skipping the pest and building inspection to save $650. Never. Ever.
- Buying at auction without a strategy. Auctions favour sellers. Off-market and pre-listing purchases avoid the auction format; outcomes vary by deal.
- Forgetting the buffer. Settle with $10k spare. Something always breaks in year 1.
The compliance frame. This article is educational, not personal financial advice. Your accountant advises on tax and structure. Your mortgage broker advises on lending. Your solicitor advises on contract terms. A licensed buyers agent advises on property selection and negotiation. The tracker models. The framework guides. Your professional team decides.