What to look for in your first or next investment property – Part 2/2
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In part one of this series on buying an investment property, I shared three key principles for owning a rental:
#1 - Treat property like marriage – Property isn’t a 5–7 year play. To unlock potentially life-changing equity, growth, and rental income, you need to commit for 15+ years and have considerable liquidity to withstand unexpected bills and interest rate rises.
#2 - Focus on location – Suburbs with top-performing schools often spark bidding wars from families wanting the best for their kids. At the same time don’t overlook rougher areas – these often offer the lowest entry prices and the fastest growth as buyers get priced out of core suburbs.
#3 - Choose the right type of dwelling – Aim for detached houses on at least 650 sqm lots. Land is gold, and bigger blocks open the door for future value-adds like granny flats. If a house is out of reach, townhouses are a solid alternative. If you're able to only afford a unit, stick to older, boutique buildings.
In this part, I’ll walk through some more key steps and lessons that can save you serious stress when you're ready – or nearly ready – to buy.
#4 – Never skip the inspection report
Many first-time buyers admit they don’t know what to look for when it comes to property defects. That’s precisely why hiring a home inspector is essential.
Inspectors have saved me hundreds of thousands of dollars — either by identifying serious problems that led me to walk away from a deal, or by providing the evidence needed to negotiate a significant price reduction.
A professional inspector will spend hours examining the property — assessing the structural integrity, roof condition, plumbing, electrical systems, moisture issues, insulation, and more. With tools like thermal imaging cameras, moisture meters, and drones, they can uncover problems that even the most diligent buyer would miss.
Let’s say an inspector flags a water tank nearing the end of its life, a roof needing replacement, non-compliant electricals, and cracked bathroom tiles.
If they estimate $50,000 in repairs, I’ll typically add a 50% buffer to cover unexpected costs and present the total figure of $75,000 to the seller during negotiations.
This approach has proven effective time and again. Sellers are often emotionally invested in the deal and will agree to a discount when presented with a clear, evidence-based case.
In one instance, I was ready to purchase a property for $350,000. The inspector found cracks in the foundation and the headache of dealing with structural issues made me pull the pin on the deal.
The seller immediately dropped the price to $285,000, but I still walked away. The risk was too great, and avoiding that deal did in fact save me a long and costly headache.
Hiring a home inspector is the best $500–$1,000 you’ll ever spend. It’s not just due diligence — it’s leverage.
#5 – Read the strata report in full
If you’re buying a unit or townhouse, the strata report is one of the most important documents you’ll encounter. Skipping over it — or reading it without understanding what to look for — is a costly mistake.
Start by reviewing the minutes of recent meetings to understand what issues have been raised and how the strata committee has handled them.
Pay close attention to the keywords “levy,” “special levy,” or “cash call.” These refer to extra payments required from owners, often due to underfunding or unplanned repairs.
While they can be a red flag, they can also signal that the hard work is being done now — meaning fewer surprises after you move in.

Next, assess the building’s financial health. Look at the balance of the administrative fund (used for day-to-day expenses) and the capital works fund (set aside for major projects like roof or window replacements). If either of these is running low or in deficit, ask why — and what steps are being taken to address it.
Take time to review the 10-year capital works plan. A thorough, forward-looking plan shows that the committee is proactive and planning for the building’s long-term upkeep.
You should also check how many units are in arrears. I own a townhouse in Emerton, NSW where, at one stage, 30% of the owners weren’t paying their strata dues. That meant the rest of us had to contribute more to the pool of funds, while also resolving to take legal action to force those in arrears to pay up.
An extra step I always take is calling the strata manager directly. Unlike agents, they have no stake in whether you buy the property, and they’re often happy to speak candidly. Ask them:
- What major works have recently been completed, and are more expected?
- How have levies changed over the past few years?
- Are there any expected special levies in the near future?
#6 – Verify the numbers
Once you’re ready to make an offer — or have already made one — take the time to validate all the key figures. Don’t rely on what’s in the listing. It may not reflect actual costs, and it certainly won’t include future liabilities like upcoming levies or rate increases.
This becomes particularly important if you’re buying the property negatively geared.
You need to be realistic about your cash position and how much of a monthly loss you can sustain — not just right now, but over time.
Ask the selling agent to provide a full breakdown of the last 12 months of financials, including:
- Rental income
- Water usage charges paid by the tenant
- Council rates and water connection charges
- Strata fees (if applicable)
- Repairs, maintenance, and other outgoings
Once you’ve verified the numbers and calculated the true cash flow position, add buffers for future capital works, unexpected maintenance, and potential rate rises. Don’t forget, even if you’re planning for capital growth, a property that puts ongoing strain on your cash flow can quickly become a burden.
#7 – Buy a pre-tenanted property (if possible)
If you can find a property with a good tenant already in place, that’s a major plus. It’s the real estate equivalent of buying a cash-generating business - you start earning income from day one.
Of course, it needs to be the right tenant. Assess how well they’ve maintained the home, and review their payment history through rental statements. If possible, I like to meet the tenant, especially if I plan to manage the property myself.
I often prefer to remove the property manager from the equation (something you can do during the sales process) and deal directly with the tenant. It gives me more control, allows me to address issues directly, and saves on the 10% management fee. I’ll usually pass some of that saving back to the tenant through a slight rent reduction, which helps keep them happy and long-term.
Reliable tenants are undervalued in the investment world. A tenant who pays on time and treats the property with respect is worth their weight in gold.
Wrapping it all up
There you have it — seven essential lessons to help you make a smarter investment property purchase.
The key is simple: do the work, ask the tough questions, and never skip the details. What you uncover early could save you thousands — or set you up for a much smoother, more profitable journey ahead.
And remember, my views shouldn't be misconstrued as a stance on property over shares - both belong in a diversified portfolio, and years like 2025 show why.
While equity markets have performed remarkably well in the past few years, sharp corrections like what we saw in April 2025 can scare even the greatest investors. Yet from Sydney to Perth, residential property values have continued to appreciate to record highs, while landlords who have done a good job managing their holdings keep enjoying strong, stable cashflows.
While it isn't without risks, property can provide a ballast to portfolios when listed assets or other income sources take a hit.
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