Understanding how to know if a property is a good investment is vital for investors looking to purchase investment property in Queensland. Skipping a thorough assessment can lead to unexpected costs, poor cash flow and low capital gains.
Queensland’s local markets, from Brisbane’s inner suburbs to regional coastal towns, differ in rental yield, demand and growth potential. Before you buy, you need clear insight into location, finance terms and maintenance risks. By checking these factors early, you’ll reduce surprises and make informed decisions.
Let’s dive into the eight essential checks to guide your next property purchase.
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1. Calculate Potential ROI
Return on investment (ROI) ties together gross rental yield, net rental yield and capital growth for your Queensland property. Here’s how to do it for QLD markets:
Formulas
- Gross Rental Yield = (Projected Annual Rent ÷ Purchase Price) × 100%
- Net Rental Yield = [(Projected Annual Rent – Annual Expenses) ÷ Purchase Price] × 100%
- ROI (%) = (Annual Net Income ÷ Total Purchase Price) × 100%
Key QLD-specific expenses to include
- Stamp duty: Use the Queensland Treasury stamp duty calculator to estimate duty on residential purchases.
- Legal and conveyancing fees: typically around $ 1,500–$ 2,500 in Brisbane and surrounding regions.
- Strata levies and body corporate fees: average $ 1,500–$ 3,000 per year in SEQ apartments.
- Property management fees & maintenance: usually 7–10% of gross rent across Queensland’s rental properties.
- Vacancy rates and landlord insurance: Brisbane hovers around 2–3% vacancy; regional coastal towns may see rates of up to 5%.
- Council rates & land tax: refer to your local council (e.g., Brisbane City, Gold Coast) for exact figures.
- Building insurance & flood cover: essential in coastal and tropical parts of QLD prone to severe weather.
A simple spreadsheet or property market research tool allows you to plug in listing prices, recent sale prices, and actual rents in your target suburb, helping you forecast your break-even point and identify the best investment option.
2. Analyse Cash Flow Projections
Positive vs negative gearing hinges on cash flow. Here’s how to project yours:
- Estimate rental income:
– Factor in average vacancy rate and seasonal demand cycles.
– Check gross rental yield benchmarks in your suburb trends. - Tally ongoing costs:
– Mortgage payments (principal & interest or interest-only loan)
– Mortgage repayments, interest rate variations, home loan features
– Property management fees, strata fees, body corporate fees
– Maintenance costs (white goods, emergency repairs, routine servicing)
– Landlord insurance, council rates, property taxes
If your projected rent comfortably covers mortgage repayments, rates, and fees, you’re positively geared, making it ideal for long-term capital growth. Otherwise, negative gearing could offer tax deductions, but it would require a solid expense buffer.
3. Evaluate Location and Neighbourhood
Spot-on location analysis can supercharge property value and rental yield.
- Key metrics:
- School catchments, shopping centres, healthcare services
- Public transport access: train stations, bus links, cycle paths
- Neighbourhood safety, crime rates and council zoning regulations
- School catchments, shopping centres, healthcare services
- Supply and demand:
- Suburb trends in new listings vs sold stock
- Auction clearance rates and days on market figures
- Upcoming zoning provisions, development plans and shopping centre expansions
- Suburb trends in new listings vs sold stock
Sources: CoreLogic, Domain House Report
Search “best neighbourhoods for property investment” to benchmark against top-performing suburbs in Queensland. You can check out our guide here for references on top suburbs and areas to purchase property according to your goals:
12 Fastest Growing Suburbs in Queensland
Queensland’s Top 10 Locations for Investment Buyers in 2025
20 Best Queensland Suburbs for Families in 2025
4. Research Local Market Trends
To research local market trends in Queensland, start by gathering data from sources like CoreLogic, Realestate.com.au, Domain and your local council’s property portals. Track year-on-year changes in median property prices, auction clearance rates and days on the market in target suburbs, from Brisbane’s inner city to the Sunshine Coast.
Keep an eye on listing volumes and new developments to gauge shifts in supply and demand, and compare sale prices against listing prices to identify areas of potential negotiation room. A dedicated property market research tool can streamline these suburb trends, while local news on infrastructure projects and zoning updates reveals which areas are poised for future growth.
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5. Inspect Property Condition
A thorough inspection protects you from hidden repair bills and depreciation surprises.
- Core areas to assess:
- Roof integrity, foundation stability and structural systems
- Electrical, plumbing and HVAC systems
- Strata fees, body corporate fees and common-area maintenance
- Roof integrity, foundation stability and structural systems
- Extras to consider:
- Condition of white goods, included fixtures and home office space
- Potential for renovation or extension under zoning regulations
- Depreciation schedule insights for tax incentives
- Condition of white goods, included fixtures and home office space
When in doubt, hire a qualified home inspector or engage property professionals to avoid nasty maintenance costs later on.
6. Understand Financing Options
Choosing the right home loan structure can save you thousands over the life of your mortgage.
- Loan types:
- Principal & interest vs interest-only loan
- Fixed vs variable interest rates
- Offset accounts and redraw facilities
- Principal & interest vs interest-only loan
- Key considerations:
- Mortgage repayments vs rental income projections
- Lender’s Mortgage Insurance (LMI) and loan-to-value ratio (LVR)
- Tax incentives, government schemes and negative gearing benefits
- Mortgage repayments vs rental income projections
Work with a mortgage broker such as the team at Zest to compare interest rates, fees and repayment schedules and lock in the deal that best suits your investment strategy.
7. Estimate Expenses and Taxes
Overlooked costs can erode your returns. Account for every line item.
- Recurring expenses:
- Property management fees and landlord insurance
- Strata fees, body corporate fees and council rates
- Maintenance costs, emergency fund, white goods replacement
- Property management fees and landlord insurance
- Tax-related costs:
- Stamp duty, legal fees, tax deductions for negative gearing
- Depreciation schedule, tax incentives and liaising with a tax team
- Property taxes, capital gains tax on resale
- Stamp duty, legal fees, tax deductions for negative gearing
Build a conservative expense buffer, aiming for 10–15% of your rental income to cover unexpected expenses and maintain a healthy cash flow.
8. Forecast Resale Value
Planning your exit strategy early helps you maximise capital growth on your Queensland investment property. Start by spotting appreciation drivers, new train stations, shopping centres, schools and zoning provisions that can lift property value.
Review historical capital gains and compare listing prices against final sale prices in your suburb trends, noting auction clearance rates and days on market to understand demand cycles.
Then apply a simple exit‐price formula: Current Market Value × (1 + Expected Annual Growth Rate)^Holding Years.
This projection helps you gauge future sale proceeds, factor in capital gains tax and stamp duty, and ensure your investment option delivers strong returns.
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Frequently Asked Questions (FAQs)
How to know if a house is a good investment?
Use a clear checklist: calculate potential ROI and rental yield, project cash flow, assess location metrics (schools, public transport, crime rates), research market trends, inspect property condition, compare financing options, estimate all expenses and forecast resale value.
What is the 1% rule?
A quick gauge where monthly rent should be at least 1% of the property’s purchase price (e.g. $2,000 rent on a $200,000 purchase) to help ensure positive cash flow.
What is the 80/20 rule in property investment?
Also known as the Pareto Principle, it suggests that 80% of your returns often come from 20% of your portfolio; focus on top-performing assets and high-growth suburbs in Queensland.
What is the 6-year rule for investment properties?
Under Australian tax law, you can treat a former home as your main residence for tax purposes for up to six years if it’s rented out in the meantime, potentially exempting capital gains tax when you sell.
What are the different types of investment properties in Queensland?
You can choose from residential homes (houses, units, townhouses), holiday rentals (coastal or hinterland), commercial spaces (shops, offices), industrial sites (warehouses) or rural land.
What are the types of loans available for property investors in Queensland?
Common options include principal & interest loans, interest-only loans, variable and fixed rate loans, split loans, construction loans, line of credit facilities and specialist SMSF loans.
Final Thoughts
Wrapping up your due diligence with this eight-point checklist means you’ll head into a property purchase with confidence and clear forecasts.
When you’re ready to turn these insights into action, our Queensland mortgage brokers at Zest Mortgage Solutions are here to help. We offer a free consultation and personalised advice for investors across the wider Queensland region.
Contact us on (07) 3461 6499 or visit zestmortgagesolutions.com.au to discuss the ideal home loan for your investment goals.
