Property Investment: How Much Do You Need to Get Started?

Property Investment: How Much Do You Need to Get Started?

Many aspiring investors assume they need a large amount of savings to enter the property market. While property does require a financial commitment, getting started may be more achievable than most people realise—especially with the right strategy, support, and planning.

This guide outlines the key costs of investing in property, using Victoria as an example. We’ll explore deposit requirements, additional upfront expenses, and alternative approaches that can help you enter the market sooner.

1. The Deposit – Your Biggest Upfront Cost

Your deposit will usually be the largest upfront expense when investing in property. The amount you need depends on the purchase price, the lender’s policies, and whether you’re eligible for any government initiatives.

Here’s how different deposit levels are generally viewed by lenders:

• 20% Deposit: Avoids Lenders Mortgage Insurance (LMI) and may offer better loan terms.

• 10% Deposit: Accepted by many lenders, though LMI usually applies.

• 5% Deposit: Available through select lenders with additional conditions, including higher LMI.

Example for Victoria (based on a $600,000 investment property):

• 20% deposit = $120,000

• 10% deposit = $60,000 + LMI

• 5% deposit = $30,000 + higher LMI

The takeaway: While a 20% deposit is ideal, it’s not essential. There are valid pathways to start with a lower deposit—if the loan is structured correctly.

2. Stamp Duty and Government Incentives

Stamp duty is one of the largest upfront costs when buying a property. In Victoria, this cost can be significant, but concessions may apply depending on the type of property and your eligibility.

• Standard stamp duty on a $600,000 property: Approximately $31,070

• Off-the-plan concession: May reduce stamp duty if the property qualifies

Tip: Use the State Revenue Office Victoria calculator to estimate your actual stamp duty based on location and property type.

3. Other Upfront Costs to Consider

Beyond the deposit and stamp duty, there are several additional expenses to plan for. These vary depending on the property type and your choice of lender or professional services.

Common costs include:

• Legal and conveyancing fees: $1,500 – $3,000

• Building and pest inspections: $400 – $800

• Loan application and lender fees: $500 – $1,500

It’s a good idea to budget around 5–7% of the property price to cover these costs. This ensures you’re prepared for the full cost of acquisition, not just the deposit.

4. Ongoing Costs – What to Expect After Purchase

Once you’ve secured the property, there are ongoing costs to consider. These can vary depending on the property’s location, type, and rental performance.

Typical ongoing expenses include:

• Mortgage repayments: Principal & Interest (P&I) or Interest-Only (IO)

• Council rates and owners corporation fees: Based on location and property type

• Property management fees: Generally 5–8% of rental income if using an agent

• Landlord insurance: $300 – $1,500 annually, depending on coverage

• Maintenance and repairs: Allow for 1–2% of property value per year

Properties in areas with strong rental demand can offset many of these costs, helping to ease the financial burden of holding the investment.

5. Can You Start with Less? Alternative Entry Strategies

If saving a full deposit feels out of reach, there are alternative ways to start your investment journey. These strategies may help you access the market sooner:

• Using equity: If you already own a property, you may be able to use the equity as a deposit for your next investment.

• Rentvesting: Rent in your preferred location while purchasing in a more affordable growth area to start building equity.

• Co-investing: Partnering with family or friends to share the deposit, costs, and responsibilities.

• Developer terms: Off-the-plan properties may allow for smaller initial deposits or staged payments.

• State-based schemes: While most national schemes target first-home buyers, investors can sometimes access concessions on off-the-plan purchases.

Example: If you own a home worth $700,000 with a $400,000 loan, you may be able to access up to $140,000 in usable equity—enough for a deposit and upfront costs for your next investment.

Bringing It All Together

Getting started in property investment doesn’t always require a large cash deposit. By understanding the real costs involved and exploring alternative strategies, you may be closer to your first investment than you think. With the right planning and guidance, you can make your first move confidently and strategically.

Want to understand exactly what you’ll need to start your investment journey? Book your investment session with PropVest and let’s explore your options together.

Disclaimer: This article is for general information only and does not constitute financial, legal, or lending advice. You should seek advice from a qualified professional before making any property or investment decisions.