The Pros and Cons of Buying Multiple Investment Properties

Each new investment property is assessed on your whole financial position, not on its own. For Doncaster investors planning a second, third or fourth purchase, that changes how much you can borrow and which loan structure suits you.

This article covers the trade-offs that matter most when you are building a portfolio: borrowing capacity, repayment structure, using equity and the tax rules. It is general information only, so speak with a licensed professional before you act.

How Much Can You Borrow for Another Investment Property?

Your borrowing power for an extra property depends on your income, your existing debts, and the rent a lender is willing to count. Banks must test new borrowers at an interest rate at least 3 percentage points above the loan rate, so a loan at 6.75% is assessed at 9.75%.

APRA's guidance says prudent lenders count no more than 80% of expected rent, which allows for periods without a tenant. Lenders also look closely at the balances, rates and remaining terms of your current loans. Every property you add brings more debt into that test, so the limit often arrives sooner than investors expect.

Banks are also limited in how much of their new lending can go to borrowers with debt of six times income or more. The cap applies to each bank's overall lending, not to individual borrowers. Non-bank lenders are not subject to this limit, although they set their own credit policies. You can get a starting estimate on our borrowing capacity page, then have a broker check it against real lender policy.

Interest Only vs Principal and Interest for a Growing Portfolio

Interest-only repayments are lower in the early years, but they do not increase how much you can borrow and they leave the loan balance unchanged. Lenders assess an interest-only loan using the principal and interest repayment over the shorter remaining term.

As an illustrative example, consider an investor with a $500,000 loan at 6.75% p.a. on a 30-year term. On interest only for five years, the repayment is about $2,813 a month. On principal and interest over 30 years, it is about $3,243 a month.

When the interest-only period ends, the loan reverts to principal and interest over the remaining 25 years. At the same 6.75%, that repayment rises to about $3,455 a month. The lender assessed the investor on principal and interest repayments over the remaining 25 years, at the assessment rate of at least 3 percentage points above the loan rate. That is a higher figure than the $3,455 repayment at 6.75%. The outcome is about $430 a month of extra cash flow for five years, which helps cover the next deposit or holding costs. The trade-off is that the balance has not dropped, and repayments are higher once the interest-only period ends.

Only the interest portion of a repayment is tax deductible on a rental property, under either structure. Check your own position with your accountant, and test other scenarios in our mortgage repayment calculator.

Using Equity to Buy the Next Property: Benefits and Risks

You can use the equity in an existing property as the deposit for the next one, which can speed up portfolio growth. The risk is that your total debt rises and the loan on each property is secured against the others' value.

Lenders generally want borrowing at or below 80% of a property's value. Going above 80% usually means paying lenders mortgage insurance, and both the lender and the insurer must approve the loan. Each lender sets its own caps, so policies differ.

What you do with the money affects the tax result. The ATO looks at how borrowed funds are used. Interest on money used for a rental property can be deductible, while interest on money used for private purposes is not. Keeping investment borrowing separate from personal spending makes this much easier to document. Your accountant can confirm how this applies to you.

If an existing loan is limiting your next purchase, a refinance may open up more options. Weigh that against the costs of switching lenders, which vary.

How the Negative Gearing Changes Affect Buying More Properties

The tax treatment of a rental loss now depends on when you bought the property. Losses on residential investments held at 7:30pm AEST on 12 May 2026, including those under contract at that time, remain deductible against other income such as salary until the property is sold.

For established residential properties bought after that time, net rental losses will only be deductible against income from residential property from the 2027-28 income year. This includes capital gains on residential property. Excess losses carry forward. Eligible new builds, such as dwellings on previously vacant land, keep the existing treatment.

For a portfolio investor, this makes cash flow more important. A property that runs at a loss may not reduce your tax on wages, so you will need to fund that shortfall from your own income. The 50% capital gains discount is also due to be replaced from 1 July 2027 for gains accruing after that date. The tax outcomes depend on your circumstances, so get advice from your accountant before you buy.

Why Your Choice of Lender Matters as the Portfolio Grows

As a portfolio grows, lender policy matters more because each lender treats rent, existing debts and equity differently. A broker can compare several lenders and match your plans to the policies that suit them.

At OVM Finance Group, we look at your whole plan before recommending a lender. That includes how many properties you want over time, so the first loan does not limit the later ones. Our investment loans team can arrange access to options from banks and lenders across Australia.

Spreading loans across lenders can give you flexibility, but it also means more accounts, more reviews and more paperwork to manage. We will explain that trade-off before you commit.

Call one of our team or book an appointment at a time that works for you, and we will map out how many properties your finances can support, and in what order.

Frequently Asked Questions