Investment Property Types: Everything You Need to Know

Understanding Investment Property Types

For police officers exploring opportunities to build wealth and secure financial freedom, property investment represents a proven pathway to creating passive income and long-term prosperity. Understanding the different investment property types available is essential when considering your property investment strategy and selecting the right investment loan products.

At Blue Loans, we help police officers access investment loan options from banks and lenders across Australia, tailored specifically to your circumstances and career profile. The property type you choose will significantly influence your investment loan features, investor interest rates, and potential tax benefits.

Residential Investment Properties

Houses

Standalone houses remain one of the most popular choices for property investors. They typically appeal to families seeking long-term tenancies, which can reduce vacancy rates and provide consistent rental income. Houses generally offer:

• Land value appreciation over time
• Potential for renovations to increase property value
• Broader appeal to prospective tenants
• Lower body corporate fees compared to units

When buying an investment property like a house, you'll need to consider factors such as maintenance responsibilities, land taxes, and stamp duty costs. Your investment loan amount will depend on the property price and your investor deposit.

Units and Apartments

Units and apartments offer different advantages for property investors, particularly those beginning their portfolio growth journey. These properties typically:

• Require lower initial investment loan amounts
• Have reduced maintenance obligations
• May provide better rental yields in urban areas
• Include body corporate management of common areas

However, body corporate fees are ongoing claimable expenses that need factoring into your calculations when working out potential returns and calculating investment loan repayments.

Townhouses

Townhouses sit between houses and units, offering a middle ground for investors. They combine aspects of both property types, providing:

• More space than typical apartments
• Lower maintenance than standalone houses
• Appeal to small families and professionals
• Moderate body corporate fees

Specialist Residential Properties

Dual Occupancy and Duplexes

Dual occupancy properties or duplexes allow you to generate rental income from two dwellings on one title. This investment property type offers:

• Two income streams from one investment loan
• Potential for owner-occupation in one dwelling while renting the other
• Better loan to value ratio (LVR) utilisation
• Opportunities to leverage equity more effectively

Police officers can particularly benefit from this strategy, especially when combined with LMI waivers that may be available through certain lenders.

Granny Flats and Secondary Dwellings

Adding a granny flat to an existing property or purchasing a property with a secondary dwelling creates additional rental income opportunities. This approach can:

• Maximise land usage and rental returns
• Provide flexibility for family arrangements
• Increase overall property value
• Generate positive cash flow to offset loan repayments

Commercial and Mixed-Use Properties

While residential properties dominate most investment portfolios, commercial and mixed-use properties present alternative opportunities for experienced investors. These include:

• Retail shops
• Office spaces
• Industrial warehouses
• Properties with ground-floor commercial and upper residential levels

Commercial investment property finance typically requires larger investor deposits and may have different interest rate structures. The investment loan features for commercial properties differ significantly from residential investment loans, with lenders assessing business viability and lease arrangements more thoroughly.

Specialised Investment Strategies

New vs Established Properties

Your choice between new and established properties affects your investment loan benefits and tax position:

New Properties:

• Higher depreciation deductions to maximise tax deductions
• Lower maintenance costs initially
• Modern fixtures appealing to quality tenants
• Potential government incentives

Established Properties:

• Generally lower purchase prices
• Established neighbourhoods with proven demand
• Immediate rental income potential
• Renovation opportunities to add value

Holiday and Short-Term Rental Properties

Investment properties used for short-term accommodation require careful consideration:

• Potentially higher rental yields during peak periods
• Greater management involvement
• Higher vacancy rates between bookings
• Different insurance and regulatory requirements

Lenders may view these properties differently when assessing your investment loan application, particularly regarding how they calculate expected need rental income.

Key Considerations for Police Officers

Interest Rate Options

When securing investment property finance, you'll choose between:

• Variable rate: Fluctuates with market conditions, offering flexibility for extra repayments
• Fixed rate: Locked interest rate providing repayment certainty
• Split loans: Combination of fixed and variable portions

Police officers may qualify for interest rate discounts through certain lenders, potentially accessing better investor interest rates than standard borrowers.

Loan Structure Decisions

Two primary repayment structures exist for property investor loans:

Interest Only Investment Loans

Interest only investment loans allow you to pay only the interest component for a set period, typically 1-5 years. This structure:

• Reduces initial repayments
• Maximises negative gearing benefits
• Improves cash flow for portfolio expansion
• Requires principal repayment eventually

Principal and Interest Loans

Principal and interest loans have you paying both loan amount reduction and interest charges:

• Build equity faster
• Reduce overall interest costs
• Provide greater long-term security
• May limit initial cash flow for further investments

Financial Considerations

Deposit Requirements

Your investor deposit significantly impacts your investment loan options. Most lenders require:

• Minimum 10-20% deposit for investment properties
• Genuine savings demonstration
• Consideration of Lenders Mortgage Insurance (LMI) if depositing less than 20%

Police officers may access low deposit loans with reduced LMI or LMI waivers through specialist lenders.

Leveraging Equity

If you own property already, you can leverage equity from your home to fund your investor deposit. This equity release strategy allows you to:

• Avoid saving additional cash deposits
• Maintain emergency funds
• Accelerate portfolio growth
• Access multiple investment opportunities

Tax Benefits and Deductions

Property investment offers numerous claimable expenses to maximise tax deductions:

• Loan interest payments
• Property management fees
• Maintenance and repairs
• Depreciation on building and fixtures
• Insurance premiums
• Council rates and body corporate fees
• Stamp duty (on established properties)

Negative gearing benefits occur when your rental property loan costs exceed rental income, creating a tax-deductible loss against your police officer salary.

Investment Loan Refinancing

As your circumstances change or you expand your property portfolio, investment loan refinance options become important. Refinancing can:

• Secure better variable interest rate or fixed interest rate terms
• Release equity for additional investments
• Consolidate multiple property loans
• Switch between interest only and principal and interest structures

Investment loan refinancing allows you to adapt your property investment strategy as markets and your financial position evolve.

Choosing the right investment property type depends on your financial circumstances, investment goals, and risk tolerance. Police officers benefit from stable employment and income, which positions you favourably when seeking investor borrowing and building wealth property portfolios.

Whether you're buying your first investment property or expanding an existing portfolio, understanding property types and matching them to appropriate investment loan products is crucial for long-term success.

Call one of our team or book an appointment at a time that works for you to discuss your investment property goals and discover the investment loan features that align with your property investment strategy.