Smart ways to build a property portfolio in Shepparton

Building a portfolio in Shepparton starts with your first property's equity

You build a property portfolio by using the equity in your existing property to fund the deposit on your next one. Once your first property increases in value, you can borrow against that growth without selling. In Shepparton, where median house prices have lifted steadily over the past few years, many investors who bought in suburbs like Mooroopna or North Shepparton now have enough equity to fund a second purchase.

Consider a buyer who purchased a three-bedroom house in Mooroopna for around $350,000 a few years back. That property is now worth closer to $420,000. With an original loan of $280,000 now paid down to $265,000, they have roughly $155,000 in equity. Lenders typically let you access up to 80% of the property's value, which means this investor could borrow up to $336,000 across both properties. That leaves about $71,000 in usable equity, enough to cover a 10% deposit and purchase costs on a second property in the $300,000 range.

This approach lets you grow your portfolio without needing to save another deposit from scratch. The key is making sure your borrowing capacity can support the additional loan, which depends on your income, existing debts, and the rental income from both properties.

How lenders assess your ability to service multiple investment loans

Lenders assess your ability to service multiple investment loans by calculating whether your income can cover the repayments on all your debts, plus living expenses, even if one property sits vacant for a period. They apply a buffer to the interest rate and often shade the rental income by 20% to account for vacancy and maintenance costs.

This is where Shepparton's rental market works in your favour. The vacancy rate in Shepparton has been consistently low, which means lenders see rental income as reliable. But even with strong rental demand, most lenders will only count 80% of the expected rent when they assess your loan application. If a property in Shepparton East rents for $400 per week, the lender will use $320 per week in their calculations.

Your total borrowing capacity also depends on your other commitments. If you have a car loan, personal loan, or credit card with a high limit, those debts reduce how much you can borrow for your next investment property. In our experience, investors who clear smaller debts and reduce credit card limits before applying for their second loan often unlock an extra $50,000 to $100,000 in borrowing capacity.

Interest-only repayments and how they affect cash flow

Interest-only repayments let you pay only the interest portion of the loan for a set period, usually five years, which keeps your monthly repayments lower and improves cash flow. Many investors choose this option on their investment loans because it frees up income to service additional properties or cover holding costs while building their portfolio.

On a $300,000 loan at current variable rates, an interest-only repayment might be around $1,500 per month, compared to roughly $2,000 on a principal and interest loan. That difference matters when you are holding multiple properties and relying on rental income to cover costs. But once the interest-only period ends, the loan reverts to principal and interest, and your repayments increase. Planning for that shift is part of building a sustainable portfolio.

Some lenders also assess your ability to service the loan based on the principal and interest repayment, even if you are applying for interest-only. That means your borrowing capacity might not increase as much as you expect, but it does ensure you are not overextending yourself.

Fixed or variable rates for investment properties

Variable rate investment loans give you flexibility to make extra repayments and access features like offset accounts and redraw, which can help you manage cash flow across multiple properties. Fixed rate investment loans lock in your repayment for a set period, which can help with budgeting, but often come with restrictions on extra repayments and limited access to offset accounts.

Most investors in Shepparton use a variable rate on their investment loans because it lets them pay down debt when they have surplus income and redraw funds if they need to cover costs on another property. If you are planning to buy a third or fourth property within a few years, that flexibility becomes more valuable.

Some investors split their loan between fixed and variable, which gives them some rate certainty while still keeping access to flexible features. The right structure depends on your income stability, how quickly you want to grow your portfolio, and whether you prefer predictable repayments or the ability to adapt as your circumstances change.

Timing your second purchase around equity and rental income

Timing your second purchase around equity and rental income means waiting until your first property has grown enough in value to provide a deposit, and the rental income is established enough to support your serviceability. Rushing into a second property before your equity has built or your rental history is solid can limit your borrowing capacity or force you to pay Lenders Mortgage Insurance on both loans.

In Shepparton, property values have been climbing in suburbs like Kialla and Shepparton South, which means investors who bought in those areas a few years ago are now in a position to leverage that growth. But equity alone is not enough. Lenders also want to see that your rental income is stable and that you have been managing the first property without issues. If you have only owned your first investment property for six months, most lenders will not count the full rental income, which can reduce your borrowing capacity.

Waiting 12 to 18 months after your first purchase gives you time to build equity, establish rental income, and demonstrate that you can manage the property. It also gives you a clearer picture of the actual costs involved, including rates, insurance, maintenance, and any periods of vacancy, so you can plan your second purchase with realistic numbers.

Using a mortgage broker to access more investment loan options

Using a mortgage broker gives you access to investment loan options from banks and lenders across Australia, not just the major banks. Different lenders have different policies on how they assess rental income, how much equity they will let you access, and how they treat multiple investment properties. A broker who works with investors regularly can match you with a lender whose policy suits your situation.

Some lenders will let you borrow up to 90% or even 95% of a property's value if you are willing to pay Lenders Mortgage Insurance, while others cap you at 80%. Some lenders are more flexible with how they assess rental income, particularly if you are buying in a regional area like Shepparton where vacancy rates are low. Others have stricter policies on the number of properties you can hold before they reduce your borrowing capacity.

A mortgage broker in Shepparton who knows the local market can also help you structure your loans in a way that supports your long-term plans. That might mean keeping your owner-occupied loan separate from your investment loans, splitting loans across different lenders to maximise flexibility, or timing your applications to avoid serviceability issues.

What changed with negative gearing and capital gains tax

From 1 July 2027, losses from established residential investment properties purchased after 12 May 2026 can only be offset against rental income or capital gains from residential property, not against your salary or other income. If your property costs more to hold than it earns in rent, you can still carry those losses forward and use them to reduce tax on future rental income or when you sell.

The 50% capital gains tax discount will also be replaced with a discount based on inflation, and a minimum 30% tax will apply to capital gains from 1 July 2027. But if you buy a new build, you can choose between the old 50% discount and the new inflation-based method, whichever works out more favourably.

If you bought your investment property before Budget night on 12 May 2026, these changes do not apply to you. Your existing tax treatment is unchanged. But if you are planning to buy an established property from mid-2026 onwards, the tax benefits are reduced, and new builds become more attractive from a tax perspective.

These changes do not stop you from building a portfolio, but they do shift the numbers. Investors who were relying on negative gearing to reduce their taxable income now need to factor in higher after-tax holding costs. That makes cash flow and rental yield more important, and it also makes new builds more appealing for investors who want to preserve the full tax benefits.

How to structure loans across multiple properties

Structuring loans across multiple properties means deciding whether to consolidate everything under one loan or keep each property on a separate loan, and whether to use the same lender or split across multiple lenders. Keeping each property on a separate loan gives you more control, because you can sell one property or refinance one loan without affecting the others.

Most investors in Shepparton keep their owner-occupied home loan separate from their investment loans, because the interest on your home loan is not tax deductible, while the interest on your investment loans is. Mixing them reduces your ability to claim deductions and makes it harder to prove which debt relates to which property if the ATO ever asks.

Splitting your loans across different lenders can also make sense if one lender has better rates for your first property and another lender is more flexible with serviceability for your second. But managing multiple lenders means more administration, and if you want to access equity later, you might need to refinance to consolidate.

Call one of our team or book an appointment at a time that works for you, and we will help you work out the structure that fits your goals and keeps your tax position clear.

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