Learn how an investment property valuation works and what lenders assess.
Understand LVR, equity release, and refinancing triggers for investors.
Explore renovations that may improve rental appeal and long-term value.
Know the tax, depreciation, and council factors to consider before upgrading.
If you own an investment property, its value influences more than a potential sale price. It can affect your borrowing capacity, loan structure, portfolio strategy, and risk exposure.
A current valuation may impact:
Whether lenders mortgage insurance (LMI) applies (often where LVR is above 80%)
Your ability to release usable equity
Refinancing eligibility
Future renovation planning
In 2026, property markets continue to shift across states and territories. Median dwelling values, investor lending activity and rental yields vary by location, which makes updated valuations important for portfolio decisions.
Understanding where your property sits in the current market can help you decide whether to hold, refinance, renovate or restructure your loan.
How property valuations work
A property valuation is an independent assessment of a property’s market value at a specific point in time.
Lenders use valuations when assessing:
New loan applications
Refinancing requests
Equity releases
Loan-to-value ratio thresholds
Valuations are not the same as real estate agent appraisals. Appraisals are estimates, while a valuation is typically conducted by a qualified valuer and follows lender guidelines.
Types of property valuations
Lenders may use different valuation methods depending on the loan type and perceived risk.
Automated Valuation Model (AVM)
A data-driven estimate based on recent comparable sales. AVMs are commonly used for lower-risk transactions.
Desktop valuation
Completed by a valuer without physically inspecting the property. Relies on available sales and property data.
Kerbside valuation
A drive-by external inspection assessing street appeal, location and visible condition.
Full valuation
A comprehensive internal and external inspection. Often required for higher loan amounts or unique properties. The valuation type used depends on lender policy, property characteristics, and loan details.
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What a valuer looks for
When assessing a property, valuers may consider:
Location and proximity to transport, schools and amenities
Land size, zoning and development potential
Recent comparable sales
Property layout and condition
Renovations or structural changes
Rental demand and local market trends
Improvements can influence value, but they need to align with surrounding property standards.
How to research your property’s market value
Before requesting a formal valuation, you can review publicly available data to understand your property’s position in the market.
Start with:
Recent comparable sales in your suburb
Rental listings and advertised weekly rents
Vacancy rates and days on market
Suburb growth trends
Zoning or planning overlays
Gross rental yield can be calculated by dividing annual rent by the property’s value. Net yield accounts for expenses such as rates, maintenance, and management fees.
An Aussie Broker can also provide a complimentary property report to help you assess current market indicators before making decisions.
Understanding equity and LVR
Equity is the difference between your property’s value and the amount you owe on your loan.
For example:
Property value: $800,000
Loan balance: $500,000
Total equity: $300,000
However, not all equity is usable. Lenders typically assess usable equity up to a certain LVR threshold, often around 80%, depending on policy.
If your property increases in value and your loan balance reduces over time, your LVR may improve.
A lower LVR can:
Reduce risk from a lender’s perspective
Improve refinancing options
Potentially reduce or remove LMI in certain circumstances
Always consider serviceability and overall debt position before accessing equity.
When to re-value or refinance your investment property
There’s no fixed timeline for re-valuing a property, but investors often review their value when:
The market has shifted
They’ve completed renovations
Rental income has increased
They want to release equity
Their fixed-rate term is ending
They are reviewing their portfolio strategy
Refinancing may allow you to:
Adjust your loan structure
Consolidate debt
Access equity for further investment
Review interest rate options
Before refinancing, assess fees, break costs (if applicable) and loan suitability.
You might also be interested in: How is property value calculated in Australia?
How to add value to your investment property
Adding value takes research and planning. Improvements should reflect tenant demand, local competition, and long-term holding strategy. It’s important to differentiate between:
Value-add renovations (aimed at increasing sale price)
Yield-add improvements (aimed at increasing rental income)
Both can influence overall return, but the impact depends on your market.
Top improvements that may appeal to tenants
Kitchen updates
Modern cabinetry, updated appliances, and durable surfaces can improve usability and presentation. In competitive rental markets, updated kitchens may influence tenant decision-making.
Bathroom upgrades
Clean, functional bathrooms are often high on tenant priority lists. Improving ventilation, lighting, and storage can enhance appeal.
Energy efficiency improvements
Solar panels, LED lighting, improved insulation and water-efficient fixtures may reduce running costs and appeal to environmentally conscious tenants.
Electric vehicle (EV) charging capability
As electric vehicle ownership grows, properties with charging access may stand out in certain suburbs.
Pet-friendly features
A significant proportion of Australian households own pets. Secure fencing, low-maintenance landscaping and durable flooring can expand your potential tenant pool.
Storage solutions
Built-in wardrobes, shelving and garage storage improve practicality and long-term liveability.
Indicative improvement considerations
Improvement | Typical Cost Range | Considerations |
Kitchen refresh | $15,000 - $25,000 | Market-dependent uplift |
Bathroom upgrade | $10,000 - $20,000 | Tenant appeal focus |
Solar installation | $5,000 - $8,000 | Energy efficiency benefit |
Indicative only, costs vary by state, labour availability, and building input prices.
Funding improvements and avoiding overcapitalisation
You may consider funding upgrades through:
Cash savings
Equity release
Refinancing
Personal loan top-ups
Before proceeding, evaluate:
Comparable sales in your suburb
Local ceiling prices
Construction cost trends
Holding period strategy
Overcapitalisation occurs when renovation costs exceed the value they add. Research your local market and seek guidance before committing significant funds.
Tax, depreciation and capital works
Renovations may have tax implications depending on the nature of the improvement.
Generally:
Structural improvements may qualify as capital works deductions over time
Plant and equipment items may qualify for depreciation
Repairs may be treated differently from capital improvements
Rules and eligibility change, so consult a registered tax professional before making decisions.
Improvements can also affect future capital gains tax calculations when the property is sold.
Council approvals and development considerations
If you’re planning structural changes, extensions, or reconfigurations, you may require council approval.
Check your relevant state or territory planning portal before commencing work. Zoning restrictions, overlays, and building codes can influence what is permitted.
If you’re considering subdividing or developing, feasibility assessments and professional advice are essential.
Investment strategy scenarios
Scenario 1: Renovate to refinance
An investor updates their kitchen and bathroom in line with local market expectations. After completion, they request a valuation. If the property's value increases and their LVR improves, they may explore refinancing to adjust their loan structure.
Scenario 2: Increase yield through targeted upgrades
An investor installs energy-efficient features and allows pets. The property attracts a broader tenant pool and achieves a higher weekly rent, potentially improving yield without major structural changes.
Outcomes vary depending on valuation results, location, market conditions, and loan suitability.
Understanding your investment property’s value can influence more than a potential sale price. It plays a role in your loan structure, equity position, and how confidently you plan improvements.
Whether you’re reviewing your LVR, considering renovations or exploring refinancing, aligning these decisions with current market conditions and your long-term goals is key.
If you’re thinking about re-valuing, refinancing or funding upgrades, a conversation with a broker can help you understand how those steps fit within your overall finance strategy.
Book a free^ chat with an Aussie Broker to review your property’s current value and explore loan or renovation funding options that suit your circumstances.