NEWS & BLOGS

Before you buy an investment property it is important to understand not just the upfront cost but also the ongoing costs going forward such as:

Upfront Costs:

Stamp Duty:

Stamp duty is a tax on a property transaction that is charged by each state and territory, the amounts can and do vary. The stamp duty rate will depend on factors such as the value of the property, if it is your primary residence and your residency status.

realestate.com.au calculator: Stamp Duty Calculator

Agents fees:

On average, Real Estate Agents in Australia charge a commission of around 2% – 2.5%. So if you’re selling your home for $1 million, for example, you’d pay $20-25,000 to the agent responsible for the sale. However, this amount can vary depending on where you live. Different states have different averages, and even whether you live in a major city or regional area can affect how much you pay.

Building Inspection reports:

Legal Fees: 

Conveyancing covers the legal and statutory process of transferring real estate ownership from one person to another. Conveyancing involves the preparation, execution and lodgment of various legal documents to enable a swift and legal sale. Typically there are 3 phases; preparation of sale contract, the exchange of contracts and completion. In Victoria, legal fees can typically cost from $600.00 – $1400.00

Ongoing Costs:

Property Management Fees:

This cost will apply only if you’re engaging a property agent, and will vary depending on how you’re using their services. From finding tenants to looking after the rental property on an ongoing basis – including managing the relationship with the tenant and maintenance – this can go as deep or as light as you like. And while the cost varies from agency to agency, it’s worth investing in a professional property manager to give you peace of mind.

Building & Landlord Insurance:

Building insurance or homeowners insurance covers you for the actual property and its permanent fixtures (like cabinetry and plumbing, for example). But as an investor, it’s smart to also get landlord insurance which protects you against risks associated with tenancy – the coverage ranges from loss of rental income to repairs for damage from both natural causes as well as by the tenant.

Land Tax:

This is an annual tax charged on investment properties by the state or territory government and is calculated on the basis of the ‘unimproved value’ – ie: how much the actual land is worth based on normal market value. There is a threshold amount set by the revenue office, and you only pay this property tax if the value of the land is above this.

Council Rates:

Once you’re a property owner, you are responsible for paying this tax on a regular basis, which covers the infrastructure and services provided by the local council – from waste collection and management to maintenance of parks and public spaces, roads and other support services.

Council rates are calculated on the basis of land value, and usually paid per annum. Bills for utilities like electricity and water rates based on usage are usually paid by the tenant, but the landlord may need to set it up in the first instance and pay for supply charges.

Maintenance & Repairs. 

As a landlord, you are responsible for the upkeep of the property. So, whether it’s fixing a broken pipe or electrical fitting, or a regular paint job, maintenance and repairs are ongoing expenses you need to set aside money for. There are certain things a tenant will need to take care of – such as replacing light bulbs while living on the property – but most repairs and maintenance falls on the property owner to manage.