Valuing an Investment Property.
Valuations play an even bigger role in investment lending than they do for owner-occupied homes. A valuation doesn’t just determine whether a loan is approved — it influences borrowing capacity, usable equity, portfolio growth, interest rates, and how easily you can move on the next purchase.
For investors, valuations aren’t a one-off event. They’re something that comes up repeatedly: when buying, refinancing, accessing equity, or reviewing an existing portfolio. Understanding how banks value investment properties — and how to manage that process — is critical if you want your lending to remain flexible over time.
This is an area where broker experience adds significant value.
How investment property valuations differ from home valuations
On the surface, investment and owner-occupied valuations look similar. In practice, lenders often treat them differently because the risk profile is different.
When valuing an investment property, banks consider:
Market value based on comparable sales
Demand for the property type (house vs unit, regional vs metro)
Market liquidity (how easily the property could be sold)
In some cases, rental appeal and investor demand
Broader exposure limits (postcode, unit density, property type)
Even when two properties are physically similar, a bank may assess them differently depending on whether they are owner-occupied or investment.
When investment property valuations are required
Valuations are typically required when:
Purchasing an investment property
Refinancing an investment loan
Accessing equity for another purchase
Reviewing rates or restructuring loans
Consolidating or separating securities
Because valuations influence not just approval but future flexibility, timing and lender choice matter.
Valuation methods used for investment properties
Lenders generally use the same three valuation methods as for homes, but apply them more conservatively.
Desktop valuations
Desktop valuations are automated and rely on recent comparable sales and market data.
They are often used when:
The property is standard and in a well-established area
The loan-to-value ratio is conservative
The lender is comfortable with the risk profile
However, desktop valuations can be conservative for:
Units in large complexes
Regional properties
Properties with unique features or renovations
Kerbside valuations
Kerbside valuations involve an external inspection only.
These are commonly used when:
A desktop valuation isn’t sufficient
The lender wants more certainty without a full inspection
The property is reasonably standard
Internal improvements may not be fully reflected, which can matter if the property has been upgraded.
Full internal inspections
Full valuations involve an internal and external inspection.
They are more common for:
Higher loan amounts
Higher LVR scenarios
Unique or renovated properties
Regional or rural-residential investments
While slower, they generally provide the most accurate picture of condition and appeal.
Why valuations can vary between lenders
A common frustration for investors is seeing different values come back for the same property. This happens because:
Lenders use different valuation panels
Lenders apply different risk settings
Different valuation methods may be triggered
Valuers interpret comparable sales differently
There is no single “correct” value — there is a range of acceptable values depending on lender appetite.
As brokers, we understand which lenders are more supportive for certain property types and which are more conservative.
Valuations and usable equity
For investors, valuation outcomes directly affect usable equity.
Usable equity is generally calculated based on:
The bank’s valuation
Lender LVR limits (commonly 80% without LMI)
Existing loan balances
Your borrowing capacity
A modest increase in valuation can:
Create usable equity for another purchase
Remove the need for LMI
Improve interest rate pricing
Strengthen servicing outcomes
Conversely, a conservative valuation can stall portfolio growth.
Managing valuations strategically as an investor
We don’t “chase” valuations, but we do manage the process strategically.
This includes:
Selecting lenders whose valuation approach suits the property type
Ordering valuations early to protect timeframes
Providing relevant information where appropriate (renovations, improvements)
Avoiding lender pathways known to be restrictive for certain assets
This is particularly important for:
Unit portfolios
Regional investments
Mixed-use or non-standard properties
Common valuation issues for investors
Valuation comes in below expectations
This can limit:
Purchase viability
Equity access
Refinance outcomes
Depending on the situation, options may include:
Testing another lender
Adjusting structure or leverage
Deferring equity release
Reviewing the broader portfolio strategy
Valuation delays impact settlement
Investment valuations can take longer, especially during busy periods.
We manage this risk by:
Choosing lenders with reliable turnaround times
Ordering valuations early
Monitoring progress closely
Portfolio exposure limits
Some lenders limit exposure to certain postcodes, unit densities, or property types. Even with a strong valuation, policy can restrict lending.
This is why lender selection matters just as much as valuation outcome.
Valuations when refinancing investment loans
When refinancing, valuations become the foundation of the entire decision.
We assess:
Whether a new valuation is likely to improve your position
Whether your existing lender may offer repricing instead
How valuation outcomes affect equity and future purchases
Sometimes staying put and restructuring makes more sense than switching lenders. A proper review looks at all options.
The Lumo approach to investment valuations
We treat valuations as a strategic tool, not a checkbox.
Our approach includes:
Lender selection based on property type and portfolio goals
Early and proactive valuation management
Clear communication around risks and outcomes
Portfolio-level thinking, not single-deal thinking
For investors, valuations don’t just support the current transaction — they shape what’s possible next.