Guide to Property Investing in Queensland


Queensland property investment can be a lucrative way of building equity and wealth for the future, but it comes with significant responsibilities. As it will act as a source of income and (ideally) profit in the long term, you need to consider a lot more than whether it is the right home for you. Here is our set of resources to get you started on the path to property investment in Queensland.

Different types of property investment in Queensland

Because Queensland investment property is about getting the right financial returns, you need to be certain that you're selecting real estate to suit your strategy. Whether it's ongoing positive cashflow or negative gearing with a view to long term capital gains, the home you buy must fit this direction.

Positive cashflow property

This refers to when the rental income you're making from the investment property is higher than the costs of running it, which includes your home loan and maintenance costs. The property will be running at a profit, with a strong rental yield (simply put, the income converted to a percentage of the property's full value).

Once values rise, however, rental yields contract. This makes it a little more difficult to establish positive cashflow via investment property in Queensland.

Negatively geared property

This term has precisely the opposite meaning of positive cashflow. Your property will be running at a loss, because interest on the home loan is higher than that of the rental income. Such a situation, though, carries benefits in the form of tax deductions. This makes it a popular choice among investors hoping to make the most of capital gains. That's because it allows them to manage an investment property that may well run at a short-term loss, but this negative is mitigated by the tax breaks. Eventually, it will produce long-term gains.

Such a method of investment is popular in Queensland because values have risen so quickly, especially in Brisbane. Even so, your particular investment strategy largely depends on your personal income.

The team at LJ Hooker Home Loans can help you gain a greater understanding of these concepts and lend advice on how to proceed with your Queensland investment.

Financing a Queensland property investment

From here, you need to decide how the property will be bought. Are you going to compare home loans by using a mortgage broker or online tool, or use equity in an existing property if you're already an owner-occupier? The Australian Investors Association and Australian Taxation Office are handy sources of information on how to do this, as well as the financial benefits and tax deductions that come with property investment.

Additionally, there are home loans specifically for property investment in Queensland, but interest rates tend to be slightly higher than for owner-occupier mortgages. It could end up being a more expensive affair than when you first bought property, so be prepared.

If your finance is organised and your investment strategy is set up, you should be ready to buy! But that isn't the end of the process.

Finding the right Queensland investment property

  • The Real Estate Institute of Queensland's market monitor is a good place to start for gauging the local landscape, with in-depth research on property values and rental yields.
  • The local division of the Property Council of Australia and CoreLogic RP Data also provide regular research and insight into the market.
  • Our real estate agents have an unrivalled market knowledge, and we can alert you to investment properties which best fit your profile and financial situation.

By working out areas with good yields and potential for capital growth that are within your means, you can narrow down your investment property search easily. You should also do research into what tenants in your area want from rental property - McCrindle's Renter of the Future report is a useful start here.

Investment property taxes

When buying for investment in Queensland, there are certain duties and taxes you'll have to pay.
The most obvious of these is transfer duty, which you can find out more about via Queensland's Office of State Revenue page. For a house that costs between $540,000 and $1 million, for example, you'll have to pay $17,325, as well as $4.50 for every $100 over $540,000. Use this handy calculator to find out what you'll owe.

Land tax is another duty that you'll have to fork out for. In Queensland, you'll only owe land tax if your property is worth more than $600,000, which will cost you $500 plus one cent for each dollar more than $600,000. This increases incrementally, right up to the threshold of a $5 million home. Take a look at this useful guide to land tax, which notes several examples.

Additionally, you will also have to cover legal fees, mortgage costs, valuations and inspections, which can often run into the thousands of dollars.

Tax benefits

Many costs incurred through running a Queensland investment property can be limited via tax deductions. There are several that you may be eligible for, such as property management fees, repair costs, legal issues and mortgage fees. The Australian Taxation Office has a complete rundown of the tax deductions that can be obtained when you own rental property.

Managing a Queensland investment property

Do it yourself, or use an agent?

Of course, once you've bought your investment property, you'll now want to see some returns through renting it out. You can do this yourself, or use a property management service such as the one provided by LJ Hooker.

As a landlord, you'll get hands-on management of your Queensland investment property which can save you agent fees, but you'll also have to learn a great deal of the legal side of things. For example, you'll need to know all about tenancy law, bond lodgment, tenant screening, ongoing repairs and a whole host of other matters. Additionally, you'll also have to live close by to your Queensland investment property, to attend to any urgent matters.

Why not choose to use a property management? Sure, it will incur service costs, but every single aspect of the investment will be managed by real estate professionals who do this for a living. LJ Hooker's property management team has unrivalled experience managing all manner of investment properties the length and breadth of Queensland.

What to ask a property manager

There are several essential questions you must ask a property agent before they take over the running of your rental, as this is your investment and income source Here are a few to think about.

How many properties do they manage, and how long have they been doing it?
Do they do repairs themselves, or is a contractor called in? Do they have the necessary qualifications for significant repairs, such as electricity or plumbing issues?
How do they select tenants for a rental property?
How are rental arrears resolved?
How much is charged, and what will this cover?
Will you be able to remain in contact with the agent, within reason?

Typically, there is a starter fee of between one and four weeks rent set by the property manager, with an ongoing percentage of monthly rent paid thereafter, falling between 5 to 10 per cent. This should be clarified when you first enter talks with a potential agent.

The advice provided on this website is general advice only. It has been prepared without taking into account your personal objectives, financial situation or needs. While every care has been taken to ensure the accuracy of the information it contains, neither the publishers, authors nor their employees, can be held liable for inaccuracies, errors or omission. Readers are advised to contact their financial adviser, broker or accountant before making any investment decisions and should not rely on this article as a substitute for professional advice. This information is to be used as a guide only and is subject to change at any time. All information is current as at publication release and the publishers take no responsibility for any factors that may change thereafter.

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