Most property investors don’t “run out of property opportunities”. They run out of borrowing capacity.
That’s the real bottleneck, not a lack of good suburbs, not a lack of listings, and not a lack of motivation. You can have the deposit, the appetite, even the right property… and still hit a wall because the bank’s numbers say “no”.
This guide breaks down practical moves AbodeFinder sees working in the real world: how investors keep their lending power alive using smart sequencing, cleaner cash flow, and (where it fits) structures like discretionary trusts, lender choice, refinancing strategy, and debt recycling. No theory for theory’s sake, just the levers that actually change outcomes when you’re trying to buy that next one or two properties.
Quick note: this is general information, not personal tax, legal or credit advice. Before you act, get your own advice for your situation, then use what you learn here to ask better questions and make faster, safer decisions.
The real game is serviceability
Why income isn’t the only lever
Most people think the bank looks at their income and makes a simple call: earn more, borrow more. That’s only half the story. What actually decides your borrowing limit is serviceability, the lender’s test of whether you can afford the loan at a higher “stress-tested” rate, not just today’s interest rate. In other words, even if your actual rate is around 6%, the bank may assess you as if you’re paying closer to 9% (give or take), to make sure you could handle rate rises and still keep up repayments.
This is where a lot of investors get surprised. They’re paying everything on time, they have equity, and the property even looks “good on paper”… but the lender’s serviceability calculator says they can’t take on more debt.
A big reason is the serviceability buffer. APRA has guidance that includes a minimum 3% buffer for many lenders when assessing home loan serviceability. That single rule can be the difference between buying your next investment property or being stuck watching the market from the sidelines.
The goal
The goal isn’t to chase the biggest loan amount. It’s to keep buying quality assets while keeping your borrowing power alive. That means thinking like a portfolio builder, not a one-off buyer choosing properties and structures that don’t crush your serviceability, and sequencing decisions so the bank keeps saying “yes” when you’re ready for property number two, three, and beyond.
The AbodeFinder portfolio approach (the sequence matters)
Step 1: Start with a clear portfolio plan
Most investors don’t fail because they picked the “wrong suburb”. They fail because they bought without a plan that the bank’s calculator can survive.
At AbodeFinder, we treat portfolio building like a sequence, not a shopping trip. You’re aiming for a mix of:
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Growth (so your equity actually compounds)
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Manageable cash flow (so you can hold through rate cycles and life changes)
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Repeatability (so you can do it again and again without hitting a wall)
Here’s the simple framing: borrowing capacity follows clarity.
When you know what you’re building, your choices tighten up fast. Property type, price point, yield profile, and even lending structure stop being “nice ideas” and start becoming deliberate moves that protect your ability to buy the next one.
Step 2: Buy assets that can carry themselves
If your first purchase drains your cash flow, your second purchase often never happens.
That’s why “self-sufficient” assets matter. Not because we’re obsessed with chasing “high yield” for its own sake, but because neutral to positive cash flow becomes your engine. It keeps the portfolio stable, it reduces pressure, and it gives lenders less reason to say no.
In plain terms: the closer each property gets to standing on its own feet, the longer you can keep playing the game and the more likely you are to build a portfolio that lasts.
Using a trust structure to protect borrowing capacity
What a discretionary (family) trust does in plain English
A discretionary (family) trust is a legal arrangement where a trustee holds and manages assets for the benefit of beneficiaries. The key word is discretionary; the trustee can decide if, when, and how much income or capital gets distributed to each beneficiary (within the rules of the trust deed).
So in simple terms:
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The trust holds the asset (like an investment property)
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The beneficiaries can receive distributions
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The trustee controls the distribution decisions
This isn’t “fancy for the sake of fancy”. It’s a tool, and like any tool, it’s only useful if it fits the job.
The borrowing-capacity idea (how it’s used in the real world)
Here’s the idea investors use: if a trust is run like a self-supporting “bucket”, meaning the rental income and the trust’s own cash flow can cover its costs, some lenders may assess it differently from your personal liabilities. It’s lender-dependent, and it’s heavily driven by how the trust is set up, how it’s documented, and what the numbers look like.
This is where strategy and paperwork meet. Because the trust doesn’t magically create borrowing power, what it can do is help preserve it if the structure, serviceability, and documentation line up.
How many properties per trust
There’s no magic number.
The practical limit is usually driven by four things:
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Cash flow (can the trust stand on its own?)
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Serviceability (what the lender calculator says, not what feels “comfortable”)
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Deposit strength (how many deposits can you actually fund without stress?)
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Lender appetite (each lender treats trusts and guarantees differently)
That’s why you’ll often see a “Trust 1, then Trust 2” approach in the real world. You build inside the first trust until serviceability starts to cap out, then you look at whether a second trust makes sense, but only if the deal quality and cash flow still stack up.
What if the property is slightly negative cash flow
The top-up move (done properly)
In a perfect world, every investment property is neutral or positive from day one. In the real world, plenty of strong long-term buys start slightly negative, especially early on, before rent rises catch up or rates ease.
One practical way investors keep a trust structure “healthy” is simple: a small, planned top-up. If the property is short by, say, a few thousand dollars a year, the investor contributes that amount so the trust can still meet its commitments without stress. The aim isn’t to pretend the numbers are better than they are. The aim is to keep the structure stable while the asset matures.
Here’s the line in the sand: If you can’t comfortably top it up, don’t force it. A trust strategy only works when you can hold the asset calmly. If the top-up turns into a monthly panic, the deal (or the plan) is wrong.
The deposit reality
A trust strategy doesn’t replace the need for a deposit, buffers, and basic financial breathing room.
You still need to fund:
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your deposit (often 10–20% depending on lender and policy)
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stamp duty and purchase costs
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cash buffers for vacancies, repairs, and rate changes
So think of trusts like this: they don’t change the fundamentals, they change the chessboard. They can help you keep borrowing capacity available for future purchases, but they don’t remove the need to bring real money and real discipline to the table.
The “tier-two then refinance” lending move
Why investors sometimes start outside the big banks
Here’s what happens to a lot of investors: they’ve got equity, they’ve got a deposit, and they’ve found a property that makes sense — but a major bank’s serviceability calculator shuts them down.
When that happens, some investors don’t quit. They change lanes. They go to non-major lenders (often called tier-two or specialist lenders) who may take a different view on servicing, income treatment, or existing commitments. The trade-off is usually obvious: the interest rate is often higher, and the product features might be less generous.
That’s not “bad” or “good”, it’s a strategy. You’re paying a premium for access to credit when the big banks won’t play. But you can’t treat it like a forever loan. It only makes sense when there’s a clear exit plan.
How refinancing can change the numbers
The exit plan is typically refinancing once the story looks stronger on paper.
Over 6–12 months, a few things can change in your favour:
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Repayment history: on-time payments build confidence for the next lender
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Rent and cash flow: leases renew, rents lift, cash flow improves
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Valuation: if the property performs, equity can increase, which can reduce LVR and improve options
Then you refinance to a more competitive lender and potentially reduce your overall cost of funds.
A word of caution: assessment methods vary lender to lender, and policy shifts over time. There’s no guarantee that “wait 12 months and refinance” works for everyone.
But the underlying framework matters, especially serviceability buffers and assessment rates. If you’re stuck today, a different lender’s approach now, and a cleaner financial profile later, can be the bridge that gets you to the next purchase.
Debt recycling (a simpler lever before trusts for some investors)
What debt recycling is
Debt recycling is a structured way to turn non-deductible home loan debt into deductible investment debt over time.
In plain English: you pay down part of your home loan, then re-borrow that same amount (using a separate loan split) for investment purposes such as buying an income-producing asset. Done properly, you gradually shift your debt from “private” to “investment”.
The key is structure. It’s typically set up with multiple loan splits so the investment portion stays clean and clearly traceable. That clean separation is what makes the strategy workable from a tax and record-keeping perspective.
Why it can lift borrowing power
For some investors, debt recycling is the “simple lever” to pull before they even think about trust structures.
Why? Because it can:
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reduce non-deductible home debt, which can improve your household position over time
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shift interest into an investment context (which may change after-tax outcomes when done correctly, this is where personal advice matters)
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create a cleaner strategy narrative when you talk to your broker about what you’re building next
It’s not a magic hack. It’s a method. And it only works if it’s done neatly.
Common mistakes to avoid:
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Mixing loans: using one loan split for both personal and investment spending (this muddies deductibility)
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Messy offsets/redraw use: pulling funds from the wrong place and losing the “purpose trail”
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Poor record-keeping: not tracking exactly where borrowed funds went, and when
If you’re considering debt recycling, treat the paperwork like part of the strategy because if the structure is messy, the benefits are messy too.
The trade-offs investors forget to price in
Land tax can bite
Trust structures can help with strategy and borrowing capacity, but they can also create costs people don’t see coming. Land tax is the big one.
Land tax rules are state-based, and trusts are often treated differently to individuals. In some states, buying in a trust can mean a lower threshold or no threshold at all, so land tax can apply earlier than it would in your personal name. That doesn’t automatically make trusts “bad”. It just means you must price it in from day one because a few thousand dollars a year changes your cash flow story fast.
Setup and ongoing admin costs
Trusts aren’t free to run.
You’ll usually have upfront setup costs and ongoing annual costs, such as:
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a trust deed and establishment fees
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a corporate trustee setup and ASIC obligations (where used)
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annual accounting and tax returns for the trust
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more moving parts: resolutions, distributions, bookkeeping, and coordination between broker and accountant
None of this is “hard”, but it’s real. If your plan is a multi-property portfolio, those costs can be a sensible price to pay. If your plan is one investment property and done, it may be overkill.
Losses and tax outcomes aren’t the same as buying personally
A trust doesn’t behave like buying in your own name. How losses are treated, how income is distributed, and what you can and can’t offset can be different depending on your structure, your beneficiaries, and your wider tax situation. The right setup for one household can be the wrong move for another.
So keep it simple: don’t choose a structure because someone on the internet said it worked for them. Use this article as a starting point, then get advice from a qualified accountant and mortgage broker who understand your goals, your cash flow, and your long-term plan.
Who this suits (and who should keep it simple)
Better fit if you:
This approach tends to work best when you’re building a portfolio, not just buying “an investment property”.
You’re a better fit if you:
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want a multi-property portfolio over the next 5–10 years
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have stable income and a clear picture of your household cash flow
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can handle a bit more admin (or you’re happy to pay professionals to handle it)
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will follow a plan instead of buying on impulse
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care about repeatable decisions: the kind you can make again for purchase #2 and #3
In other words, you’re thinking like a builder, not a bidder.
Poor fit if you:
This is where people get themselves into trouble, they copy a “clever” strategy without the foundations.
It’s usually a poor fit if you:
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want set and forget and don’t want extra moving parts
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are already stretching cash flow, or relying on everything going perfectly
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are buying a low-quality asset “just to get started”
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haven’t got the time (or interest) to understand the basics of how the structure and lending interact
If you’re in this camp, that’s not a problem. The simplest strategy done well beats a complex strategy done badly every time.
AbodeFinder’s role (strategy first, property second, lending aligned)
What we actually do
AbodeFinder helps Australians buy investment property with confidence by starting with the part most people skip: a clear strategy that matches your borrowing capacity.
We’re a licensed buyer’s agent working Australia-wide, and we bring it together in one place:
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data-led suburb insights (so decisions aren’t guesswork)
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a tailored investment strategy (built around your goals and constraints)
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property sourcing that fits the brief
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due diligence to reduce nasty surprises
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inspections and coordination when you can’t be on the ground
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negotiation to protect your entry price
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settlement coordination to keep the process moving
And because property investing is as much a finance game as it is a property game, we also coordinate lending support as part of a one-stop shop, ensuring the strategy, the property, and the lending structure aren’t working against each other.
That’s how you avoid the most common investor headache: buying a property you like, then finding out it quietly killed your ability to buy the next one.
FAQs
Is buying investment property in a trust worth it in Australia?
Sometimes, yes. It can make sense when you’re building a multi-property portfolio and you want more control over how income is distributed and how future purchases are structured. The trade-off is extra admin, accounting costs, and in some states, higher land tax treatment for certain trust types. It’s a strategy decision, not a default setting.
Does a discretionary trust improve borrowing capacity?
It can help preserve borrowing capacity in some situations, but it’s not automatic. Lenders assess trusts differently, and the result depends on cash flow, guarantees, documents, and the lender’s policy at the time. The best way to think about it: a trust can support a lending strategy when the numbers are solid and the setup is clean.
How many properties should I buy in one trust?
There’s no set number. It usually comes down to:
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cash flow strength inside the trust
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serviceability limits with your lender
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deposit and buffer capacity
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how comfortable you are with complexity
Many investors follow a “Trust 1, then Trust 2” approach once the first trust starts to cap out on servicing.
What is the APRA serviceability buffer and how does it affect me?
APRA guidance includes a minimum 3% serviceability buffer that many lenders apply when assessing home loans. That means the bank tests whether you can afford repayments at your rate plus 3%, which can reduce how much you can borrow and how quickly you can buy again.
What is debt recycling and can it help me buy another property?
Debt recycling is a structured approach where you pay down part of your home loan, then re-borrow that amount (usually in a separate split) for investment purposes. Over time, you’re shifting debt from non-deductible to investment-related, where interest may be deductible depending on use and structure. It can improve your position and flexibility, but it needs clean splits and good records.
Will I pay more land tax if I buy in a trust?
Potentially, yes. Land tax rules vary by state, and trusts can be treated differently to individuals. In NSW, for example, certain trusts can be assessed as “special trusts” and may not receive the same threshold treatment you’d get personally. Always price this in before you buy.
Conclusion
Most investors don’t stall because they “can’t find a deal”. They stall because the plan doesn’t protect serviceability.
That’s the real shift: more properties usually come from a better plan, not a bigger pay rise. When your strategy, cash flow, and lending structure work together, you keep moving even when the market changes and lending tightens.
If you’re aiming for 2+ purchases over the next few years, start with a borrowing-capacity game plan before you pick the next suburb. AbodeFinder can help you line up the strategy, the numbers, and the property decisions so you’re not guessing your way into a dead end.
