Do you know how to acquire multiple investment properties?

Acquiring Multiple Investment Properties Requires Different Loan Structures

Acquiring multiple investment properties is less about finding good deals and more about structuring each loan so it doesn't restrict the next one. Most investors who stop at one or two properties do so because their first property investment loan consumed too much of their borrowing capacity, not because they ran out of deposit funds.

The difference lies in how you structure repayment types, split loan amounts, and preserve equity access from the start. Consider an investor who purchases a two-bedroom unit in Preston at the suburb's current median, using a 20% deposit to avoid Lenders Mortgage Insurance. If they set that loan to principal and interest on a 30-year term, their repayments will be higher, and the property will need strong rental income to remain serviceable. However, if they structure it as interest only for the first five years, their repayments drop significantly, leaving more borrowing capacity available for the next purchase. That same investor, with the same income and deposit, could qualify for a second investment loan within 18 to 24 months if the first loan was structured correctly.

Preston offers a mix of older-style units, townhouses, and renovated period homes near High Street, which means rental income varies widely depending on property type and proximity to train stations. An investor looking to build a portfolio here needs to account for vacancy rates and body corporate fees on units when calculating serviceability, as lenders will stress-test rental income assumptions and reduce the amount they're willing to lend if the figures don't stack up.

How Lenders Assess Serviceability Across Multiple Properties

Lenders assess your ability to service an investment loan by calculating whether you can afford the repayments at a higher interest rate than you'll actually pay, usually around 3% above the current variable rate. They also reduce the rental income they'll accept, typically applying a 20% to 30% haircut to account for vacancy and maintenance costs.

When you apply for a second or third investment property loan, lenders reassess all your existing debts, including the first investment property. If your first loan is set to principal and interest with high repayments, it reduces how much you can borrow for the next property. If it's interest only, the repayments are lower, so more of your income is available to service the new loan. This is why structuring the first loan correctly matters more than the property you buy.

In our experience, investors who acquire multiple properties within a five-year period almost always use interest only repayments on their investment loans and keep their owner-occupied home loan on principal and interest. This combination maximises tax deductions on the investment properties while building equity in the home, which can be released later to fund additional deposits.

Using Equity to Fund the Next Deposit

Once your first investment property increases in value or you pay down the loan, you can access that equity to fund the deposit for your next purchase without selling the property. Lenders will allow you to borrow up to 80% of the property's value without paying Lenders Mortgage Insurance, which means if your Preston unit is now valued higher than the purchase price, the equity can be released through a refinance or top-up.

As an example, an investor who purchased a property and now has equity available could apply to access that equity by increasing the loan amount on the first property. That additional borrowing becomes the deposit for the second property. The key is ensuring the loan to value ratio across your entire portfolio stays within the lender's limits, as exceeding 80% LVR will trigger LMI, which adds to your costs and reduces the viability of the next purchase.

This approach works well in suburbs like Preston, where property values have risen steadily due to proximity to the CBD, the Mernda train line, and ongoing development around Bell Street and High Street. Investors who bought here several years ago and structured their loans with equity release in mind are now able to leverage that growth into second or third properties without needing to save another full deposit.

Interest Only vs Principal and Interest for Portfolio Growth

Interest only repayments reduce your monthly outgoings, which improves serviceability and allows you to borrow more across multiple properties. Principal and interest repayments build equity faster but reduce your borrowing capacity because the repayments are higher.

For investors focused on portfolio growth, interest only is the preferred option during the acquisition phase. Once you've built the portfolio to the size you want, you can switch loans to principal and interest and start paying down the debt. The danger is setting loans to principal and interest too early, which limits how many properties you can acquire before hitting your serviceability ceiling.

Lenders typically offer interest only periods of five years, after which the loan reverts to principal and interest unless you apply to extend it. Some lenders will extend interest only terms if the loan to value ratio is strong and the property continues to generate rental income. Others will not, so it's worth selecting a lender with flexible investment loan features from the start.

How the 2026 Budget Changes Affect New Purchases

If you're acquiring multiple investment properties from mid-May 2026 onwards, the federal budget changes to negative gearing and capital gains tax will affect how you structure your portfolio. Under the new rules, losses from established residential properties purchased after 12 May 2026 can only be offset against rental income or capital gains from residential property, not against your salary or wages. This takes effect from 1 July 2027.

For investors building a portfolio, this means negative gearing still works, but only across your residential property holdings. If one property runs at a loss and another generates positive rental income, you can offset the loss against the income. You can also carry forward unused losses to offset future residential property income or capital gains. What you can't do anymore is reduce your taxable salary by claiming rental losses, which was the primary tax benefit for most investors.

The capital gains tax changes introduce a minimum 30% tax on gains and replace the 50% CGT discount with cost base indexation from 1 July 2027. Properties purchased before budget night retain the existing CGT treatment, so timing matters. Investors who bought established properties in Preston before 12 May 2026 are grandfathered under the old rules. Those buying from 13 May 2026 onwards will be subject to the new rules from 1 July 2027.

New builds remain incentivised, as investors purchasing newly constructed properties can choose between the 50% CGT discount or the indexed cost base, whichever delivers the lower tax outcome. This creates a structural advantage for new builds over established properties in terms of both tax deductions and capital gains treatment.

Selecting Lenders with Portfolio-Friendly Policies

Not all lenders treat investment property loans the same way. Some will lend across multiple properties with minimal restrictions, while others will cap the number of investment loans you can hold or reduce their loan to value ratio once you own more than two or three properties.

When building a portfolio, you need access to investment loan options from lenders who don't penalise you for owning multiple properties. Some lenders will continue lending at 80% LVR regardless of how many properties you own, provided serviceability is met. Others will drop their maximum LVR to 70% or 60% once you hold more than a certain number of properties, which forces you to provide larger deposits and slows your acquisition rate.

Investor interest rates also vary by lender, and the difference can be significant across a portfolio. A 0.20% difference in the interest rate might seem minor on one property, but across three or four properties it compounds quickly. Working with a broker who has access to investor loan products across multiple lenders allows you to match each property to the most suitable lender, rather than placing your entire portfolio with one bank that may not offer the most competitive terms.

If you're considering refinancing an existing investment loan to release equity or improve your interest rate, make sure the new loan structure supports future portfolio growth. Refinancing to a lender with restrictive investment loan policies can limit your ability to acquire additional properties later, even if the rate looks attractive now.

Structuring Loans to Maximise Tax Deductions

All interest paid on an investment loan is a claimable expense, along with property management fees, body corporate fees, council rates, insurance, and maintenance costs. The goal is to maximise tax deductions while ensuring the loan structure supports future borrowing.

One common approach is to split the investment loan into multiple accounts: one for the core loan amount and another for any equity release or future top-ups. This keeps the original loan clean and ensures that any additional borrowing is clearly linked to investment purposes, which is important for tax deduction claims. Mixing investment and personal expenses within the same loan account can create problems at tax time, as only the portion of interest attributable to the investment is deductible.

If you're using equity from your owner-occupied home to fund the deposit on an investment property, that equity loan should be set up as a separate split and clearly documented as investment-related. Lenders will often allow you to structure this as part of your home loan or as a standalone facility, depending on your needs. The interest on this split is tax deductible because the funds are being used for investment purposes, even though the loan is secured against your home.

For investors in Preston acquiring multiple properties, this level of loan structuring becomes critical once you own more than one property. Without clear separation between loans and purposes, your accountant will spend more time unpicking transactions, and you risk losing deductions due to poor record-keeping.

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