Buying an investment property is a numbers decision, not an emotional one. Get four things right and the rest follows: a suburb owner-occupiers want, the property type it rents best, a yield your cash flow can carry and a price backed by evidence.
I’m Sam Price, Registered Property Valuer, Licensed Buyer’s Agent and Town Planner, with 25+ years in the Brisbane property market. This guide sets out what I check before recommending an investment purchase to a client, from choosing the suburb to running the numbers.
How do I buy an investment property in Brisbane?
The process runs in six steps:
- Set your strategy and budget. Decide whether you are chasing capital growth, rental income or a balance of the two. Confirm your borrowing capacity before you start looking.
- Choose the suburb. Look for strong owner-occupier demand, low vacancy and easy access to transport, schools and shops.
- Choose the property type. Match the dwelling to the people who rent in that suburb. Houses suit family areas. Units rent well near universities, hospitals and the city.
- Run the numbers. Work out the gross yield, then the net position after rates, insurance, management fees and maintenance.
- Do the due diligence. Building and pest inspections, flood mapping, town planning overlays and a close read of comparable sales.
- Negotiate on evidence. Pay what the comparable sales support, not what the campaign suggests.
What is an investment property?
An investment property is real estate bought to generate a return rather than to live in. The return comes two ways: rental income while you hold the property and capital growth in its value over time. Because you will not live there, the test for every decision is simple. What will a tenant pay and what will a future buyer pay? Your own taste does not get a vote.
What makes a good investment property?
A good investment property does two jobs at once. It grows in value and it rents reliably.
Capital growth is the increase in the property’s value over time and it is where most of the wealth is built. Growth follows scarcity. Suburbs with limited land, established character homes and a high share of owner-occupiers have historically held their value better than areas with plenty of new supply. Study the suburb’s median prices and its long term trend before you commit.
Rental demand is the depth of the tenant pool. Strong demand means low vacancy, steady rent and a choice of good applicants. It is driven by position: transport, schools, shops and employment. A property that leases quickly at full market rent is doing its job.
What is rental yield and how do I calculate it?
Gross rental yield is the annual rent divided by the purchase price, expressed as a percentage. A house renting for $750 a week returns $39,000 a year. On a $1,000,000 purchase that is a gross yield of 3.9 per cent.
Net yield is the more honest figure. It deducts the holding costs: council rates, water access charges, insurance, property management fees, maintenance and land tax where it applies, plus body corporate levies on a unit or townhouse. Net yield always reads lower than gross and it is the number your cash flow lives on.
What is cash flow and why does it matter?
Cash flow is the money moving in and out of the investment each month. If the rent covers the mortgage repayments and all the holding costs, the property is positively geared. If it does not, you are topping up the difference from your own income while you wait for rents and value to rise.
Neither position is wrong. What matters is knowing your number before you buy. Model the repayments at an interest rate higher than the one you are offered, allow for vacancy between tenancies and keep a buffer for repairs. If you expect a net rental loss, ask your accountant about a PAYG withholding variation, which can improve your cash flow through the year instead of waiting for tax time.
Where should I buy an investment property in Brisbane?
Buy where owner-occupiers dominate. Suburbs where most homes are owner-occupied tend to be better kept and more tightly held, which supports both values and rents through the cycle.
Position does the rest. Tenants pay for walkable shops and cafes, parks, good schools and public transport. In Brisbane’s inner west, suburbs such as Ashgrove and Paddington show the pattern clearly: character housing, strong schools and established streets keep buyer and tenant demand deep. If you are researching from interstate, inspect in person or have someone on the ground do it for you, because no listing photo shows you the traffic noise or the slope of the block.
Should I buy a house, a unit or a townhouse?
Match the property to the suburb’s tenants. A house with a backyard suits family suburbs such as Ashgrove, Bardon and Paddington. A unit or townhouse rents well near universities, hospitals and the city, in areas such as Toowong, Kelvin Grove and Auchenflower.
Houses cost more to buy, insure and maintain, but you own the land and land is what appreciates. Units start at a lower price and need less upkeep, but body corporate levies for administration and the sinking fund sit on top of the usual holding costs and rise as the building ages. Neither is automatically better. The right choice depends on your budget, your strategy and the suburb you have chosen.
What should I check on an older investment property?
Age is not the problem. Condition is. Brisbane’s older housing stock includes some of its best investments, but maintenance is the cost that quietly eats a return, so every older property needs a thorough building and pest inspection before you sign.
- Structure and services. Stumps, roof, wiring and plumbing are the expensive systems. Price any work into your offer.
- Planning overlays. Many pre-1947 homes in Brisbane’s inner suburbs sit within the Traditional Building Character overlay, which limits demolition and some alterations. Know what applies before you plan changes.
- Renovation scope. Minor work can lift rent and value. Major structural work risks overcapitalising, which means spending more than the suburb will give back.
Older properties also carry different depreciation entitlements from new ones, so ask your accountant what you can claim before you buy rather than after.
What features do Brisbane tenants look for?
Aim for the widest practical pool of tenants for that suburb. In Brisbane the features that consistently earn their keep are air conditioning, ceiling fans, built-in wardrobes, security screens, a dishwasher, covered parking and extra storage. An internal laundry matters in units. A second bathroom, a lockup garage or a home office widens the pool further.
Layout counts as much as inclusions. Natural light, cross ventilation and a floor plan that works for everyday living hold tenants longer than cosmetic finishes do. Small upgrades such as fresh paint or new bathroom fixtures can lift the rent for a modest outlay.
What should I look for when buying an investment property?
Before making an offer, I want to answer yes to every question on this list:
- Is the suburb dominated by owner-occupiers, with low vacancy and a solid history of growth?
- Does the property type match what tenants in that suburb rent?
- Does the gross yield stack up and does the net position fit my cash flow at a higher interest rate?
- Has a building and pest inspection cleared the expensive systems?
- Have I checked flood mapping, zoning and any character or heritage overlays?
- Do comparable sales support the price I am about to pay?
If any answer is no, the property is not ready to buy, whatever the marketing material says.
How can a Buyer’s Agent help with an investment purchase?
I bring the evidence to the decision. As a Registered Property Valuer, Licensed Buyer’s Agent and Town Planner I assess the property the way a valuer does, read the planning position the way a town planner does and negotiate knowing exactly what the comparable sales support. The discipline matters because the return on an investment property is largely set on the day you buy.
If you are considering an investment purchase in Brisbane or South East Queensland, you can see what a Buyer’s Agent costs or book a free discovery call. You can also email admin@templetonproperty.com.au or call 0418 159 993.
I look forward to hearing from you.
Sam Price, Registered Property Valuer, Licensed Buyer’s Agent and Town Planner, with 25+ years in the Brisbane property market.