When Is the Right Time to Buy Your First Investment Property in Melbourne?

You’ve been steadily paying down your home loan, maybe even making extra repayments to get ahead. Your mortgage no longer feels like it’s running the show, and being debt-free is starting to feel within reach.

But then friends and colleagues start investing—and you wonder:
“Is just paying off my mortgage the smartest move?”

It’s a valid question.

While owning your home outright is a great foundation for retirement, it may not be enough to fund the lifestyle you really want.

True financial security often comes from building wealth beyond the family home—through shares, superannuation, and smart property investment.

So, when should you take that step?

There’s no one-size-fits-all answer, but here are three signs you might be ready.

✅ 1. You’ve Built Up Equity

Equity is the difference between your home’s value and what you owe on it. In Melbourne, rising prices (along with consistent repayments) can build equity faster than you think.

Once you’ve got at least 20% equity, lenders may be open to extending more credit—often without lenders mortgage insurance. At 40% equity or more, you’re in a strong position to access funds for an investment purchase.

📍 Example:
You own a home in Coburg worth $1M and owe $700k. That’s $300k in equity (30%). A lender may let you borrow enough to buy a $500k+ investment, as long as you stay under the 80% combined LVR.

💰 2. You’ve Got Spare Cash Flow

Equity alone won’t get you there—you need to comfortably service another loan.

💡 Stress test your budget by adding 2% to today’s interest rates.
If you can still afford the repayments—especially with rental income helping—you’re likely ready to invest.

📊 3. You’re Comparing Returns, Not Just Paying Down Debt

Once your mortgage interest repayments are similar to what you’d pay in rent (called imputed rent), it’s time to reconsider your strategy.

Why? Because investment properties are bought for return, not lifestyle.

This means you can look for:

• Higher growth suburbs
• Better rental yields
• Tax benefits (like depreciation and negative gearing)

All of which can potentially outperform simply paying off your home faster.

🏘️ Bonus Strategy: Rentvesting

One increasingly popular option in Melbourne is rentvesting—renting where you want to live, and owning where it makes more financial sense.

For example, you might rent in South Yarra for lifestyle, but own an investment in Sunshine, Reservoir, or Werribee where yields are higher and long-term growth potential is strong.

✅ Rentvesting allows you to:

• Get onto the property ladder sooner
• Maximise returns
• Keep lifestyle flexibility
• Claim tax deductions

It’s a powerful option for those priced out of their dream suburb but still keen to invest.

🔎 The Bottom Line

There’s no universal rule for when to buy your first investment property—but if you’ve got equity, cash flow, and a long-term mindset, you may be closer than you think.

And the timing might be right.

Melbourne’s market has underperformed compared to other capitals in recent years—but that’s exactly why smart investors are circling. With population growth, infrastructure investment, and a tightening rental market, opportunity is building.

Whether you invest while living in your home—or rentvest your way to financial freedom—Melbourne may offer the ideal mix of value, timing, and upside.

👉 Are you thinking about investing in Melbourne? Or curious if rentvesting could be right for you? Let me know in the comments or feel free to connect.