Top tips to pick an investment property in Halls Head

Picking an investment property in Halls Head starts with rental income

The property that feels right on inspection is not always the one that performs when you need income every fortnight. Halls Head has a median house price of $880,000, with house rental income sitting at $631 per week and a gross yield of 4.35%. Units have a median value of around $501,576 with a gross rental yield of 5.84% from median rents of $567 per week, making units a notable option for yield-focused buyers. If you are borrowing most of the purchase price and need the property to cover most of its own costs, the unit market in Halls Head offers better cashflow than a house at the same loan-to-value ratio.

Consider a buyer who borrows 80 per cent of the purchase price on a unit valued near the suburb median. Weekly rent of $567 translates to approximately $2,455 per month. An interest-only loan at current variable rates on a $400,000 loan amount would cost roughly $2,000 per month before strata fees, insurance and other holding costs. The rental income does not cover all expenses, but the shortfall is smaller than it would be on a house priced at $880,000 with a weekly rent of $631 and a much larger loan.

Units in Halls Head are concentrated in complexes near the marina and beach precincts, where proximity to the water and established amenities supports tenant demand. Houses in the suburb tend to attract families looking for backyards and space, but at a higher purchase price the yield drops and the borrowing capacity required increases. When comparing properties, calculate the rental yield for each and model the weekly shortfall or surplus after all holding costs, not just the interest.

What deposit do you need for an investment property in Halls Head

Most lenders require a 20 per cent deposit to avoid paying Lenders Mortgage Insurance on an investment loan. Buyers who already own their home and have equity can often borrow against that equity rather than needing cash savings. If you do not have equity and are saving a deposit, budget for both the deposit and the upfront costs including stamp duty, building and pest inspections, and conveyancing fees.

Stamp duty on a property in Western Australia is calculated on the full purchase price. There are no first home buyer concessions for investment properties, so stamp duty on a unit valued at $500,000 is approximately $17,765, and on a house valued at $880,000 is approximately $34,590. Add another $2,000 to $3,000 for settlement and inspection costs. A buyer purchasing a $500,000 unit with a 20 per cent deposit would need $100,000 for the deposit plus approximately $20,000 for upfront costs, totalling around $120,000.

If you have owned your home in Halls Head for a few years and the property has increased in value, you may be able to access equity without selling. Lenders typically allow you to borrow up to 80 per cent of your home's value across all loans secured against it. A home valued at $880,000 could support total lending of $704,000. If your existing mortgage is $400,000, you could access up to $304,000 in equity, which would cover the deposit and costs for an investment property without needing cash savings. Down to Earth Mortgage Broking can help you understand how much equity you can access and structure the borrowing so that each loan remains clearly linked to its purpose for tax reporting.

Interest-only loans reduce your monthly repayment but not your tax benefit

Interest on borrowings used to acquire or hold residential rental property is deductible against assessable income to the extent the property is rented or held to produce assessable income. An interest-only loan on an investment property keeps your monthly repayment lower than a principal-and-interest loan, which can reduce the amount you need to contribute each month if the rent does not cover all expenses. The interest component is fully deductible, so paying interest-only does not reduce your tax benefit compared to principal-and-interest.

Most lenders offer interest-only periods of up to five years on investment loans. After that period ends, the loan reverts to principal-and-interest unless you apply to extend the interest-only term. Some lenders will extend for another five years if your circumstances support it, but each lender applies different criteria.

If you hold a property under the grandfathering rule, losses from that property remain fully deductible against all income including wages. Properties held at 7:30pm AEST on 12 May 2026, including properties under contract awaiting settlement at that time, continue to have losses fully deductible against other income until the property is sold. For properties purchased after that date, losses related to established residential investment properties acquired after 7:30pm AEST on 12 May 2026 are deductible only against other income from residential properties, including capital gains on residential properties, from the 2027-28 income year. If you are buying an established unit in Halls Head now, the interest and other holding costs can only be offset against income from other residential investments or future capital gains from the 2027-28 tax year onward. The shortfall still exists, but the tax treatment is different. You can read more about investment loan options on our website.

Should you buy a house or a unit for rental yield in Halls Head

Yield and capital growth do not always move together. Houses in Halls Head are priced higher and attract lower gross yields than units, but they also tend to hold their value better during downturns because land appreciates and improvements depreciate. Units deliver stronger cashflow in the early years, but strata fees add a fixed cost that does not apply to houses, and not all unit complexes are well maintained.

A unit near the Halls Head foreshore or marina precinct will attract tenants looking for proximity to the beach, cafes and walking paths. These tenants are often couples or small families who prioritise location and lifestyle over space. A house further from the water will attract families who need a backyard and multiple bedrooms, but the pool of tenants willing to pay higher rent for those features is smaller, and vacancy periods can be longer if the property is not well located within the suburb.

In our experience, buyers who need the property to be close to cashflow neutral in the first few years perform better with a unit in Halls Head than a house. Buyers who have a larger deposit, stronger income and can carry a higher shortfall each month may prefer a house for the land component and lower strata risk. Both are valid strategies, but they suit different financial positions and risk appetites.

Fixed or variable rates for an investment loan

Fixed rates give you certainty over your repayment for a set period, but you lose flexibility if you want to make extra repayments or refinance before the fixed term ends. Variable rates let you pay off the loan faster or refinance without penalty, but your repayment will increase if rates rise. Many investors split their loan between fixed and variable to get some certainty and some flexibility.

If you are using interest-only repayments, your monthly cost is more sensitive to rate changes than a principal-and-interest loan, because the entire repayment is interest. A 0.25 per cent rate increase on a $400,000 interest-only loan adds around $83 per month to your repayment. On a principal-and-interest loan, the same rate increase adds less to the monthly cost because part of each repayment is fixed principal.

We regularly see investors fix part of their loan for two or three years to protect against rate rises during the early years of ownership, when cashflow is tightest, and leave the rest on a variable rate so they can make extra repayments or refinance without penalty if their circumstances change. If you are not sure which structure suits your situation, call Mel today and we can model the monthly cost under different rate scenarios and loan splits before you commit.

Vacancy rates and tenant demand in Halls Head

Halls Head is an established suburb with a mix of retirees, families and workers commuting to Mandurah or Perth. The suburb is well serviced by schools, medical facilities and shopping centres, and the foreshore and marina precincts are popular with both residents and visitors. Rental demand is steady, but vacancy periods do occur, particularly for properties that are priced above market or that require maintenance before a tenant will commit.

Budget for at least two weeks of vacancy per year when calculating your expected rental income. If the property is vacant for a month, you will need to cover the full loan repayment, strata fees, insurance and council rates without any rental income. A property that breaks even when tenanted can cost you $3,000 or more during a vacancy period, so keep a buffer in your offset account or savings to cover those gaps.

Properties that are well presented, priced at or slightly below market rent, and managed by a local property manager tend to have shorter vacancy periods than properties managed by owners or priced optimistically. A property manager in Halls Head will know which streets and complexes attract tenants quickly and which take longer to lease, and they can advise on small improvements that make a property more appealing without overcapitalising.

How borrowing capacity works for investment loans

Lenders assess new borrowers' capacity to service a home loan, including a residential investment loan, at an interest rate that is at least 3.0 percentage points above the loan product rate. If the investment loan rate is 6.5 per cent, the lender will assess your ability to repay at 9.5 per cent. This serviceability buffer reduces the amount you can borrow compared to what the actual repayment would be at current rates.

Each lender may lend up to 20 per cent of new investor loans to borrowers with a total debt-to-income ratio of six times or greater. If your household income is $120,000 per year, your total borrowing across all loans, including your home loan and the new investment loan, is limited to $720,000 at most lenders unless you fall within that 20 per cent exception. These limits apply from 1 February 2026 and affect borrowers with existing debt more than first-time investors.

Lenders also apply a rental income shading policy, which means they only count 80 per cent of the expected rental income when assessing your ability to service the investment loan. If the property generates $567 per week in rent, the lender will only credit you with $453 per week in their serviceability calculation. The shortfall between the actual loan repayment and the shaded rental income reduces your borrowing capacity for future loans, so buyers planning to build a portfolio need to structure their loans carefully from the first purchase. We work with buyers in Halls Head to structure their investment loan application so that borrowing capacity is preserved for future purchases, not just the first property.

Call Mel today or book an appointment at a time that works for you. We can walk through property options in Halls Head, model the cashflow for different purchase prices and loan structures, and connect you with lenders who understand investment lending in regional Western Australia.

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