Knowledge Base
Property Investment Glossary
Plain-English definitions of the key terms every Australian property investor should know. No jargon, no fluff — just clear explanations.
B
Buyers Agent
A licensed real estate professional who works exclusively for the buyer in a property transaction. Unlike selling agents who represent the vendor, a buyers agent represents your interests — from strategy and sourcing through to negotiation and settlement.
Learn more →C
Capital Growth
The increase in a property's value over time. Capital growth is the primary way most property investors build wealth. It is driven by supply and demand factors including population growth, infrastructure investment, and constrained housing supply.
Learn more →Cash Flow
The difference between rental income and all holding costs (mortgage repayments, rates, insurance, management fees, maintenance, and vacancy). Positive cash flow means the property puts money in your pocket. Negative cash flow means you fund the shortfall from your income.
Learn more →D
Depreciation
A non-cash tax deduction that allows property investors to claim the decline in value of the building structure (Division 43) and fixtures and fittings (Division 40) over time. A qualified quantity surveyor prepares a depreciation schedule to maximise legitimate claims.
Learn more →Due Diligence
The process of thoroughly investigating a property before purchasing. Includes building and pest inspections, strata reports, flood and bushfire mapping, comparable sales analysis, rental appraisals, cash flow modelling, and contract review.
Learn more →E
Equity
The difference between a property's current market value and the outstanding loan balance. Equity grows as the property increases in value and as you pay down the loan. Usable equity can be accessed to fund deposits on additional investment properties.
Learn more →G
Gross Yield
The annual rental income divided by the purchase price, expressed as a percentage. For example, a property purchased for $500,000 that rents for $500 per week ($26,000 per year) has a gross yield of 5.2%. Gross yield does not account for holding costs.
Learn more →I
Interest-Only Loan
A loan structure where you pay only the interest for a set period (typically 1–5 years), then switch to principal and interest repayments. This reduces initial holding costs but does not reduce the loan balance during the interest-only period.
L
Lenders Mortgage Insurance (LMI)
A one-off insurance premium charged by lenders when you borrow more than 80% of a property's value (LVR above 80%). LMI protects the lender — not you — if you default. Most investors aim for a 20% deposit to avoid LMI.
Learn more →Leverage
Using borrowed money to control a larger asset. In property, a bank typically lends 80% of the purchase price, meaning a $100,000 deposit can control a $500,000 asset. Leverage amplifies both gains and losses.
Learn more →Loan-to-Value Ratio (LVR)
The loan amount expressed as a percentage of the property's value. An 80% LVR means you're borrowing 80% and providing 20% as a deposit. LVRs above 80% typically trigger Lenders Mortgage Insurance.
Learn more →N
Negative Gearing
When the total costs of owning an investment property (mortgage interest, rates, insurance, management fees, depreciation) exceed the rental income. The resulting loss can be deducted against your other taxable income, reducing your overall tax bill.
Learn more →Net Yield
The annual rental income minus all holding costs (rates, insurance, management, maintenance, vacancy), divided by the purchase price, expressed as a percentage. Net yield gives a more accurate picture of actual return than gross yield.
Learn more →O
Off-Market Property
A property that is available for sale but not listed on public property portals like realestate.com.au or Domain. Off-market properties are typically sold through agent networks, often with less competition and better negotiating conditions.
Learn more →P
Positive Gearing
When the rental income from an investment property exceeds all holding costs. The property puts money in your pocket each week. You pay tax on the profit. Many investors start negatively geared and transition to positive gearing as rents increase over time.
Principal and Interest (P&I)
A loan repayment structure where each payment covers both the interest charged and a portion of the loan balance (principal). Over time, the loan balance reduces to zero. P&I repayments are higher than interest-only but build equity from day one.
R
Rentvesting
The strategy of renting where you want to live while owning investment property where the numbers work. This allows you to live in your preferred location without being financially constrained by an expensive owner-occupier mortgage, while building wealth through investment property.
Learn more →S
Serviceability
A lender's assessment of your ability to meet loan repayments. Lenders apply a buffer (typically 3% above the actual interest rate) when assessing serviceability to ensure you can withstand future rate increases. Your income, expenses, existing debts, and dependents all affect serviceability.
Settlement
The legal process of transferring property ownership from the seller to the buyer. Settlement typically occurs 30–90 days after contracts are exchanged. On settlement day, the balance of the purchase price is paid and the buyer receives the keys.
Stamp Duty
A state government tax charged when you purchase property. The amount depends on the purchase price, the state or territory, whether you're a first home buyer, and whether the property is for investment or owner-occupation. Also called transfer duty.
Learn more →Strata Report
A report on the body corporate records of a unit or apartment complex. It reveals the financial health of the strata scheme, any upcoming special levies, building defects, disputes, and by-laws. Essential due diligence for any unit purchase.
V
Vacancy Rate
The percentage of rental properties in an area that are unoccupied at any given time. A vacancy rate below 2% indicates strong rental demand. Below 1% indicates a severely undersupplied market where landlords have significant pricing power.
Learn more →Still Have Questions?
Book a free discovery call and we'll answer your specific questions about property investment.
Book a Free Call