Beginner
Finance
6 min read
How Much Money Do I Need to Start?
Complete breakdown of upfront costs for property investment in Australia. Learn about deposits, stamp duty, and hidden costs with realistic examples.
Published June 2025 | Updated June 2025
One of the most common questions from aspiring property investors is: "How much money do I actually need to get started?" The answer isn't just your deposit - there are several upfront costs that can catch beginners off guard. This guide will break down every cost you need to know about, with real examples from different Australian states.
The Short Answer: More Than Just Your Deposit
While you might think you only need a 20% deposit, the reality is you'll need significantly more. Here's the breakdown:
Quick Example: $500,000 Property in NSW
- Deposit (20%): $100,000
- Stamp duty: $17,990
- Legal fees: $2,000
- Building/pest inspection: $600
- Loan costs: $1,000
- Other costs: $1,500
Total upfront cost: $123,090
That's 23% more than just the deposit alone!
Breaking Down the Upfront Costs
Let's examine each upfront cost in detail so you can budget accurately:
1. Deposit (Usually 20%)
Most lenders require a minimum 20% deposit for investment properties. This avoids Lender's Mortgage Insurance (LMI) and gives you better interest rates. While you can sometimes get away with 10% deposit, you'll pay LMI which can add thousands to your costs.
- $400,000 property = $80,000 deposit
- $600,000 property = $120,000 deposit
- $800,000 property = $160,000 deposit
2. Stamp Duty (Varies by State)
Stamp duty is a state government tax on property purchases. Investment properties typically pay higher rates than owner-occupier properties. Here's what you can expect:
Stamp Duty by State (Investment Property)
$500,000 property examples:
- NSW: ~$17,990 (includes foreign buyer surcharge if applicable)
- VIC: ~$21,970 (includes investor surcharge of 3%)
- QLD: ~$15,925 (includes foreign buyer surcharge if applicable)
- WA: ~$17,765
- SA: ~$21,330
- TAS: ~$20,475
Note: These rates change frequently and vary based on your circumstances. Always check current rates with your state revenue office.
3. Legal and Conveyancing Fees
You'll need a solicitor or conveyancer to handle the legal aspects of your purchase:
- Conveyancing fees: $1,200-$2,500
- Property searches: $200-$400
- Settlement fees: $200-$300
4. Property Inspections
Never skip these crucial inspections:
- Building inspection: $300-$500
- Pest inspection: $200-$400
- Combined building/pest: $500-$800
- Strata inspection (units): $250-$400
5. Loan Establishment Costs
Lenders charge various fees to set up your mortgage:
- Application fee: $0-$600
- Valuation fee: $300-$600
- Settlement fee: $150-$300
- Mortgage registration: $150-$200
6. Other Upfront Costs
Don't forget these additional expenses:
- Landlord insurance: $400-$800 (annual)
- Property management setup: $200-$400
- Council rates adjustment: Variable
- Utility connections: $200-$500
Real-World Examples by Property Price
Here are comprehensive breakdowns for different property values across major cities:
$400,000 Unit - Brisbane, QLD
- Deposit (20%): $80,000
- Stamp duty: $7,175
- Legal fees: $1,500
- Inspections: $600
- Loan costs: $800
- Insurance & other: $1,000
Total: $91,075 (22.8% of property value)
$700,000 House - Melbourne, VIC
- Deposit (20%): $140,000
- Stamp duty: $38,370 (incl. 3% investor surcharge)
- Legal fees: $2,000
- Inspections: $700
- Loan costs: $1,200
- Insurance & other: $1,500
Total: $183,770 (26.3% of property value)
$1,000,000 House - Sydney, NSW
- Deposit (20%): $200,000
- Stamp duty: $40,490
- Legal fees: $2,500
- Inspections: $800
- Loan costs: $1,500
- Insurance & other: $2,000
Total: $247,290 (24.7% of property value)
What About Lower Deposit Options?
While 20% is ideal, there are alternatives if you don't have that much saved:
10% Deposit + LMI
You can borrow with a 10% deposit, but you'll pay Lender's Mortgage Insurance:
- $500,000 property with 10% deposit = $25,000 LMI approximately
- $600,000 property with 10% deposit = $32,000 LMI approximately
Guarantor Loans
If parents own property, they might guarantee part of your loan, allowing you to borrow up to 105% of the property value (covering purchase costs too).
Important Considerations
Lower deposit options come with higher risks and costs. LMI is non-refundable, and guarantor arrangements can strain family relationships. Always seek professional advice before considering these options.
How to Save for Your Deposit
Saving $100,000+ can seem overwhelming, but here are proven strategies:
1. Set a Specific Timeline
Work backwards from your goal. If you need $120,000 and can save $2,000 per month, you'll need 5 years. Be realistic about your timeline.
2. Automate Your Savings
Set up automatic transfers to a high-interest savings account the day you get paid. Treat it like a bill that must be paid.
3. Reduce Major Expenses
- Consider a cheaper rental or move back with parents temporarily
- Sell your car and use public transport
- Cancel subscriptions and memberships you don't use
- Cook at home instead of eating out
4. Increase Your Income
- Ask for a pay rise or promotion
- Take on a side hustle or freelance work
- Sell items you no longer need
- Consider house-sitting or renting out a room
Don't Forget the Buffer
Beyond upfront costs, successful investors keep an emergency buffer for:
- Vacancy periods: 2-4 weeks rent minimum
- Maintenance emergencies: $2,000-$5,000
- Property improvements: $5,000-$15,000
- Interest rate rises: Ability to service higher repayments
The 25% Rule
A good rule of thumb is to have 25% of the property's value in cash before you buy. This covers your deposit, all upfront costs, and leaves you with a decent buffer for unexpected expenses.
State-Specific Considerations
Each state has different rules and costs that can affect your budget:
New South Wales
- First Home Owner Grant not available for investment properties
- Foreign buyer surcharge of 8% if you're not a resident
- Land tax threshold of $969,000 for investors
Victoria
- 3% investor surcharge on stamp duty
- Vacancy tax in some council areas
- Land tax threshold of $300,000 for investors
Queensland
- Foreign buyer surcharge of 7% if applicable
- Land tax threshold of $600,000 for investors
- Body corporate records search for units (~$50)
Getting Professional Help
Consider working with professionals who can help you navigate costs and options:
- Mortgage broker: Can find loans with lower fees and better rates
- Buyer's agent: May negotiate better prices, offsetting their fees
- Accountant: Can advise on tax implications and structuring
- Financial planner: Can help create a savings and investment strategy
Use Our Calculator
Want to calculate exact costs for a specific property? Try our Investment Property Calculator to get accurate estimates including all upfront costs for your state.