The deposit is only the first number to consider when buying an investment property. The bigger question is whether you can comfortably hold the property through vacancies, repairs and changes in interest rates.

A good investment plan should still work when the year is less than perfect.

Calculate the True Holding Costs

Rental income can help with repayments, but it rarely tells the whole story. Your ongoing costs may include:

• Loan repayments and interest

• Council and water rates

• Landlord and building insurance

• Property management fees

• Strata or owners corporation fees

• Land tax, where applicable

• Repairs, maintenance and compliance costs

• Periods without a tenant

Some expenses may be tax deductible, but they still need to be paid when they fall due. Speak with a qualified tax adviser about how the rules apply to you.

Pressure-Test the Numbers

Do not assess the property using only today’s repayment or the agent’s rental estimate.

Run the numbers with a higher interest rate, lower rent and several weeks of vacancy. Consider what would happen if a major repair arrived at the same time. If the shortfall becomes uncomfortable quickly, the purchase may be placing too much pressure on your household cash flow.

Keep a Financial Buffer

A cash buffer can give you time to manage unexpected costs without relying immediately on credit cards or selling under pressure.

The right amount will depend on the property, your income stability and the rest of your portfolio. An older house may require a different buffer from a newer apartment, while a single-income household may prefer more breathing room than a dual-income household.

Final Thoughts

Affordability is not simply about receiving loan approval. It is about being able to hold the investment through different market conditions.

Prestige Finance Brokers can help you model the lending side, understand your potential repayments and pressure-test the finance before you commit.

General information only. Property investment involves risk. Consider obtaining independent financial, legal and tax advice.