Top tips to choose the right investment property type

The property type you choose for your next investment shapes everything from how much you can borrow to what you can claim at tax time.

Labrador sits in an interesting position for property investors. You've got newer canal-front houses on the eastern side near the Broadwater, older brick and tile units around Marine Parade, and a mix of townhouses and duplexes scattered through the inland pockets. Each of these property types comes with different lending conditions, different running costs, and different tax implications. Picking the wrong one can limit your investment loan options before you even submit an application.

How property type affects your borrowing capacity

Lenders assess different property types using different serviceability formulas and loan-to-value ratios. A two-bedroom unit in a block of 50 apartments will be treated very differently to a three-bedroom house on a standard residential lot, even if both properties cost the same amount.

Units and apartments typically attract lower maximum LVRs, particularly if the building has more than six storeys or fewer than 10 total dwellings. Some lenders won't lend above 80% LVR on high-density stock, which means you'll need a larger deposit or you'll trigger Lenders Mortgage Insurance at a lower borrowing threshold. Serviced apartments, studio units, and properties with commercial zoning often face even tighter restrictions. In our experience, buyers who fall in love with a specific unit before understanding how their lender will treat it often find themselves scrambling to increase their deposit or switching to a different property type entirely.

Houses on standard residential land generally attract the most flexible lending terms. You can usually borrow up to 90% or even 95% of the property value with LMI, and most lenders apply their standard interest rates without loading. Duplexes and townhouses fall somewhere in the middle, depending on whether they're on individual titles or part of a strata scheme.

Units versus houses for rental yield and vacancy

Units in Labrador, particularly those within walking distance of the Broadwater or near the Labrador State School precinct, tend to deliver higher rental yields than houses. A two-bedroom unit might rent for around $500 to $550 per week, which on a lower purchase price often translates to a yield above 5%. Houses in the same suburb might rent for $650 to $750 per week, but the purchase price is higher, so the yield typically sits closer to 4% to 4.5%.

The trade-off is tenant turnover and vacancy risk. Units attract more short-term renters, including people in transition, younger workers, and those who prioritise location over space. That can mean more frequent lease changes and higher vacancy rates compared to family homes. Houses, particularly those with yards and garages, tend to attract longer-term tenants such as families who value stability and local schools. Lower turnover means fewer weeks without rent and lower costs for advertising and re-letting.

Consider a scenario where you're comparing a $550,000 unit returning $530 per week against a $750,000 house returning $680 per week. The unit delivers a higher percentage yield, but if it sits vacant for three weeks every 18 months and the house stays tenanted for three years straight, the gap in actual cash flow narrows quickly once you account for body corporate fees, re-letting costs, and lost rent during vacancies.

New builds and the CGT changes from July 2027

The recent Federal Budget introduced a major shift in how capital gains tax applies to investment properties purchased after 12 May 2026. From 1 July 2027, established residential properties bought after Budget night will no longer qualify for the 50% CGT discount. Instead, gains will be taxed using cost base indexation, and a minimum 30% tax will apply to capital gains.

New builds are exempt from this change. If you buy a newly constructed property, you can choose between the old 50% discount or the new indexed method, whichever works out better for you when you eventually sell. That makes new builds significantly more attractive from a tax perspective, particularly if you're planning to hold the property for the long term and expect solid capital growth.

In Labrador, new builds are less common than in suburbs like Coomera or Pimpama, but there are pockets of newer townhouse developments and low-rise unit blocks that qualify. The lending conditions on new builds can be tighter in some cases, particularly if you're buying off the plan, but the tax advantages now outweigh those hurdles for many investors. You'll also benefit from full depreciation deductions on fixtures, fittings, and the building itself, which you don't get with older established properties due to previous legislative changes.

Negative gearing and property type from mid-2027

From 1 July 2027, negative gearing deductions on established residential properties purchased after 12 May 2026 will only be claimable against rental income or capital gains from residential property. You won't be able to offset those losses against your wage or salary income anymore. Excess losses can still be carried forward to future years, but the immediate tax benefit disappears.

This changes the cash flow equation significantly, particularly for high-income earners who previously relied on negative gearing to reduce their taxable income each year. If you're buying an established house or unit in Labrador and you're expecting to run at a loss once you factor in loan repayments, body corporate fees, and maintenance, you need to be comfortable carrying that shortfall without the offset against your salary.

New builds, once again, are excluded from this change. You can still claim negative gearing deductions in full against all income sources if the property is newly constructed. That makes the cash flow profile of a new townhouse or unit far more manageable than an older equivalent, even if the purchase price is slightly higher. Commercial property is also unaffected, so if you're considering a small retail or office investment, the old rules still apply.

Strata title, body corporate, and ongoing costs

Units and townhouses in Labrador typically come with body corporate fees ranging from around $60 to $120 per week, depending on the age of the building, the number of units, and the facilities included. Older low-rise blocks with minimal common areas tend to sit at the lower end. Complexes with pools, gyms, lifts, or canal frontage can push well above $100 per week.

Those fees are fully tax-deductible, but they still reduce your net rental income and affect your cash flow. A house on a standard lot has no body corporate fees, but you carry full responsibility for maintenance, insurance, and any capital works like roof replacement or fence repairs. The choice between the two often comes down to whether you'd rather pay a predictable weekly fee or absorb irregular but potentially larger one-off costs.

Sinking funds and special levies are another consideration with strata properties. If the body corporate hasn't been setting aside enough for long-term maintenance, you could be hit with a special levy for roof repairs, lift replacement, or repainting. Some lenders will ask to see the body corporate financial statements before approving your investment loan application, particularly if the sinking fund balance looks low relative to the age and condition of the building.

Which property type suits your investment strategy

If your goal is to build a portfolio quickly using equity from multiple properties, units and townhouses let you enter the market at a lower price point and potentially accumulate more properties over time. The higher rental yield also helps with serviceability when you're applying for your next loan. If you're focused on long-term capital growth and minimising tenant turnover, houses on larger blocks tend to perform over time, particularly in established suburbs close to schools, parks, and transport.

For investors buying after Budget night who want to preserve access to full negative gearing deductions and the 50% CGT discount, new builds are now the only option. That narrows your choices in Labrador, but it doesn't eliminate them. You'll need to weigh the tax advantages against the potential for slower capital growth in the first few years, which is a common trade-off with newly constructed properties.

If you're refinancing an existing investment property or considering a purchase in a neighbouring suburb like Southport or Biggera Waters, the same rules apply. Property type drives lending terms, tax treatment, and cash flow, and those factors matter more now than they did 12 months ago.

Call one of our team or book an appointment at a time that works for you. We'll walk through your specific situation, compare loan options across the lenders we work with, and help you structure your borrowing around the property type that suits your goals.

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