Stop Buying Investment Property in 2024. Unless You Meet These 3 Conditions.

I sell property services for a living. Our revenue comes from buyer's agent fees. So when I tell you that most people should not buy an investment property right now, you should probably listen.

We turn away more clients than we take on. That sounds like terrible business strategy, and maybe it is. But the alternative is helping someone buy a property they can't afford, watching them struggle for three years, and then seeing them sell at a loss. That's worse for them and worse for our reputation.

So here are the three conditions you need to meet before I'll help you buy. If you don't meet all three, I'm going to tell you to come back when you do.

Condition 1: 20% deposit, no exceptions

I've covered this before, but it bears repeating. A 5% deposit on a $700,000 property means 20x leverage. Lenders Mortgage Insurance adds $15,000-$25,000 to your loan. You're underwater the moment settlement completes 1.

A 10% deposit is better but still risky. You're paying LMI, your equity buffer is thin, and any market softening puts you in negative equity territory.

Twenty percent. That's $140,000 on a $700,000 property. Plus stamp duty ($25,000-$37,000 depending on first-home buyer status). Plus conveyancing, inspection, and settlement costs ($3,000-$5,000). Total cash required: approximately $170,000-$185,000.

If you don't have that, you're not ready. Rent for another year. Focus on income acceleration. Build the deposit properly. A year of renting costs you approximately $25,000. A forced sale after buying with insufficient deposit costs you $80,000-$120,000. The maths is clear.

Condition 2: stable income that can survive a shock

Your mortgage repayment on a $560,000 loan (80% of $700,000) at 6.5% interest-only is approximately $3,033 per month. On a principal-and-interest basis, it's $3,540 per month.

Banks assess your serviceability at 3% above the actual rate — so they test whether you can handle repayments at 9.5%. But the bank's test and your real-world resilience are two different things 2.

I want to know: if your income dropped 20% tomorrow — reduced hours, redundancy, business downturn — could you still cover the mortgage for twelve months without selling? Could you cover it alongside your own housing costs (rent or owner-occupied mortgage)?

If the answer is no, you need a bigger cash buffer or a more affordable target property. I've seen too many clients who were fine at purchase and devastated eighteen months later when life threw a curveball. The mortgage doesn't care about your circumstances. It expects payment every month regardless.

Our rule of thumb: your total debt repayments (including your own home loan if applicable) should not exceed 30% of your gross household income. Above that threshold, a single income disruption becomes a crisis.

Condition 3: a clear investment strategy, not just a desire to own property

"I want to build wealth through property" is not a strategy. It's a wish.

A strategy answers these questions: What is my target yield? What is my target holding period? How will the property generate income above its costs? What is my exit plan if the strategy doesn't work? How does this property fit into my broader financial position 3?

Most people who come to us can't answer more than one of these questions. That's fine — it's literally our job to help them develop the strategy. But they need to be willing to engage with the process, not just hand over money and hope.

The clients who get the best results from our service are the ones who understand that property investment is a 10-year commitment with a clear operational plan. Buy in a growth suburb. Renovate or add a granny flat to engineer the yield. Hold through rate cycles. Review annually. Develop or sell when the numbers demand it.

The clients who get the worst results — the ones we try to screen out during our initial consultation — are the ones who say: "Just find me something good." That's not a brief. That's an abdication of responsibility.

I want every one of our clients to succeed. And success starts with being genuinely ready — financially, psychologically, and strategically — before you sign anything.

If you meet all three conditions, come talk to us. We'll find you something that works.

If you don't? Save. Learn. Earn more. Come back when you're ready. The market will still be here. And it'll be worth more — which, ironically, is exactly the motivation you need to get ready faster.