Everything you need to know about property investment

Property investment works when the numbers stack up and the loan structure fits how you earn.

FIFO truck drivers have reliable income but irregular pay cycles, which changes how lenders assess borrowing capacity and what loan features actually matter. The recent Federal Budget also changed the tax treatment for properties bought after May, so the numbers look different now than they did six months ago.

What an Investment Loan Actually Does

An investment loan funds a property you rent out rather than live in. Lenders assess it differently to an owner-occupied loan because rental income supports the repayments, and the tax treatment is different. You can claim the interest as a deduction against your rental income, and if the property costs more to hold than it earns, those losses can offset other income under certain conditions.

For FIFO workers, the application process looks at your base salary plus allowances. Most lenders will accept 80% to 100% of regular allowances when calculating what you can borrow, which matters when rental income only covers part of the loan. If your take-home is $120,000 including allowances and you want to borrow $450,000 for an investment property, the rental income might cover $28,000 a year in holding costs while your salary services the rest.

Interest Only Repayments and How They Work for Investors

Most investors start with interest only repayments for the first few years. You only pay the interest portion each month, which keeps the loan amount the same but reduces the monthly cost. On a $450,000 loan at current variable rates, interest only might cost around $2,200 per month compared to $2,800 for principal and interest.

The difference matters when you are holding costs against rent. If the property brings in $480 per week, that is $24,960 a year. Interest only repayments let you hold the property without chipping in as much from your wage, which is useful in the first few years when you are still building equity elsewhere. After the interest only period ends, the loan reverts to principal and interest and the repayments go up. Most interest only loans for FIFO workers run for five years before switching over.

The Deposit and What Lenders Mortgage Insurance Costs

You need at least a 10% deposit for an investment property, though some lenders want 20%. If you borrow more than 80% of the property value, you will pay Lenders Mortgage Insurance. On a $500,000 property with a 10% deposit, LMI might add $15,000 to $20,000 to your loan amount, depending on the lender and your income profile.

FIFO workers sometimes access LMI waivers through specific lenders who treat regular FIFO roles as lower risk. If you have been in the same role for two years and your employer is a recognised mining or logistics contractor, a waiver can save you that $15,000 to $20,000 clip. Not all lenders offer it, so it comes down to who you apply with.

Variable or Fixed Rates for Investment Loans

Variable rates move with the market, fixed rates lock in for a set period. Most investors either go fully variable or split the loan between fixed and variable. Variable gives you flexibility to make extra repayments or refinance without break costs. Fixed gives you certainty on repayments for one to five years, but you cannot pay more than a small amount extra without penalties.

If you fix $300,000 of a $450,000 loan and leave $150,000 variable, you get predictable repayments on two thirds of the debt and flexibility on the rest. That structure works when you expect rates to move but want some protection. Variable rates also tend to come with offset accounts, which let you park cash and reduce the interest charged without locking it away.

How the May Budget Changed the Tax Treatment

If you bought an established investment property before 12 May, the existing tax rules still apply. You can claim the full loss against your wage income, and when you sell, you get the 50% capital gains discount if you held it for more than 12 years.

For properties bought after that date, the rules change from 1 July 2027. Losses from the property can only be offset against other property income, not your wage. You can carry those losses forward to use in future years, but you cannot use them to reduce your tax bill in the year they happen unless you have other rental income. The capital gains discount also shifts to an inflation-indexed model with a 30% minimum tax, though new builds still get the choice between the old and new system.

In practical terms, this means an established property bought now will not deliver the same tax benefit it would have a year ago. If your rental property costs you $8,000 more than it earns each year, you used to be able to claim that $8,000 against your FIFO wage and reduce your tax by $3,000 or so. From mid-2027, that $8,000 just carries forward until you earn income from another property or sell. The property still builds equity, but the short-term tax outcome is different.

Borrowing Capacity and How Rental Income is Assessed

Lenders add a portion of the expected rental income to your wage income when they work out how much you can borrow. Most lenders use 80% of the rent to account for vacancy and maintenance costs. If the property rents for $500 per week, the lender will only count $400 per week, or $20,800 a year, as usable income.

Your borrowing capacity also depends on your other debts and living costs. If you already have a mortgage or car loan, those repayments reduce what is left over to service the investment loan. FIFO workers often have higher discretionary income because they spend less on day-to-day living while on site, but lenders use a standard benchmark for living expenses regardless of your roster.

Consider someone earning $120,000 with a $350,000 owner-occupied mortgage and no other debt. They want to borrow another $450,000 for an investment property that will rent for $480 per week. The lender adds $20,000 of rental income to the $120,000 wage, then deducts the existing mortgage repayments and a standard living cost figure. What is left determines whether the $450,000 loan is serviceable. In that scenario, it might be tight, but if they have been paying down the owner-occupied loan or have an offset balance, the numbers usually work.

Refinancing an Investment Loan When Rates or Equity Change

Refinancing lets you shift to a lower rate, access equity, or restructure the loan. If you bought three years ago and the property has increased in value, you might have enough equity to borrow against for a second property or to reduce your loan to value ratio and remove LMI.

FIFO workers refinance investment loans for two main reasons: the rate is no longer competitive, or they want to pull equity out to fund another purchase. If your investment property was worth $500,000 when you bought it and is now worth $600,000, and you have paid the loan down to $400,000, you have $200,000 in equity. You can borrow against that equity without selling, though the lender will want to keep your total loan to value ratio under 80% to avoid LMI on the refinance.

Investment loan refinancing also makes sense when your income has increased or your circumstances have changed. If you have moved from a casual contract to a permanent FIFO role, some lenders will now offer lower rates or waive LMI where they would not have before.

Offset Accounts and Why They Matter More Than Redraw

An offset account is a transaction account linked to your loan. The balance in the offset reduces the amount of interest you pay without actually paying down the loan. If you have a $450,000 loan and $30,000 sitting in the offset, you only pay interest on $420,000.

For investment loans, an offset is more useful than a redraw facility. With redraw, any extra repayments you make reduce the loan balance, and you can pull that money back out if you need it. But pulling money out of a redraw can affect your tax deductions because the ATO treats it as a new purpose for the borrowed funds. An offset keeps the loan balance the same, so your deductions stay intact, and you can move money in and out without any tax complications.

FIFO workers often build up cash between rosters or during high-earning periods. Parking that in an offset account reduces interest costs without locking it away, and you still have access if something comes up.

How Vacancy Rates and Body Corporate Fees Affect Cash Flow

Vacancy rates vary by location and property type. Units in oversupplied areas might sit empty for weeks between tenants, while houses in high-demand suburbs rent quickly. A vacancy rate of 2% to 3% is normal in a stable market, but if the local rate is sitting at 5% or higher, you need to account for longer gaps between tenants.

Body corporate fees apply to units and townhouses. They cover building insurance, common area maintenance, and sinking fund contributions for major repairs. Fees range from $1,000 to $5,000 a year depending on the property and the facilities. Those fees come out of your rental income, so a property that rents for $450 per week but has $3,000 in body corporate fees is really only netting you $20,400 instead of $23,400.

When you run the numbers on an investment property, rental income minus loan repayments, body corporate, council rates, insurance, and maintenance gives you the actual holding cost. If that figure is negative, you are funding the shortfall from your wage. That is fine if the property is building equity and the tax treatment works in your favour, but if the shortfall is too wide and the tax benefit has changed, the investment might not deliver the return you expect.

Expanding from One Property to Two

Once the first investment property has built some equity, the next question is whether to buy another one. Lenders assess your total debt position, so the second property needs to stack up alongside the first. If the first property is still costing you money each month, that reduces how much you can borrow for the second one.

Expanding your property portfolio depends on serviceability, not just equity. You might have $150,000 in accessible equity, but if your income cannot service another $400,000 loan on top of what you already owe, the lender will not approve it. FIFO income helps here because it is typically higher than equivalent non-FIFO roles, but the lender still applies standard serviceability buffers.

Some investors wait until the first property is positively geared or close to it before buying the second. Others use equity release and accept a higher overall debt load because they are confident in long-term capital growth. Both approaches work depending on your risk tolerance and how much cash flow you can commit.

Property investment for FIFO workers comes down to picking the right loan structure, understanding how your income is assessed, and running the numbers with the current tax rules in mind. Call one of our team or book an appointment at a time that works for you.

Frequently Asked Questions