The Real Expenses of Investment Properties: What You Should Know Before You Dive In

Hey there! Are you excited about diving into the property investment world but a bit confused about the costs involved? Worry not! We are here to guide you through the nitty-gritty details of owning an investment property. This isn’t just about the mortgage for investment property or home loan for investment property; we’re talking about all the other costs that you might not have considered yet.

The Cost Breakdown: Before and After Purchase

When planning to invest in property, many folks just think about their mortgage repayments and the rent they’ll collect. They often overlook additional costs, which can be a big boo-boo! To make wise investment choices, you need to know the full picture.

Upfront Costs You Can’t Ignore

  1. Deposit: This is your initial investment and can be as little as 10% of the property’s total cost. For a $800,000 house, you’d need at least $80,000 in your pocket. A smaller deposit often means paying for Lender’s Mortgage Insurance (LMI).
  2. Lender’s Mortgage Insurance (LMI): This is what protects the lender in case you can’t pay back the loan. The cost depends on the amount of your deposit and the loan size. It’s usually a one-time charge.
  3. Stamp Duty: This is a tax that your state government charges when you buy a property. The cost changes based on your location and the property’s price.
  4. Conveyancing Fees: This covers the legal process of changing property ownership and can cost anywhere between $400 to $ 2.5000.
  5. Building and Pest Inspection: Trust us, you don’t want to skip this. You might end up shelling out a fortune on repairs if you do. Typically, this will set you back $300 to $1,000.
  6. Mortgage Registration Fee and Land Transfer Fee: These fees are usually under $500 but are necessary for the legal stuff.
  7. Application Fees: This is the fee for your home loan application. Some lenders might skip this as a promotional deal, but it’s good to be prepared just in case.

So let’s say you’re looking at a $800,000 property. You might need close to $19,000 just to secure it, considering all the upfront costs.

Ongoing Costs: The Bills Keep Coming

  1. Repairs and Maintenance: Things break; it’s a fact of life. Keep some money aside for when you need to fix a leaky tap or paint a room.
  2. Body Corporate Fees: Own a unit or townhouse? You’ll need to pay fees for shared amenities like pools and gyms.
  3. Insurance: Besides insuring the property itself, consider landlord’s protection insurance to guard against tenant-related losses.
  4. Property Management Fees: If you hire someone to manage the property for you, this will be a regular cost.
  5. Utilities: You might choose to handle these costs, especially if you want to make the property more appealing to potential tenants.
  6. Council Rates: As the landlord, you’ll need to cover these yearly taxes charged by local governments.
  7. Mortgage Repayments: This is likely to be your biggest ongoing cost, so plan wisely.

Tax Benefits

On the bright side, many of these expenses can reduce your taxable income, so don’t forget to consult with a tax advisor to make the most out of your investment.

Ready to Jump In?

We know that investing in property sounds like a huge undertaking with all these costs, but don’t let that discourage you. The key is to plan and prepare. If you’ve been in the market for a long time and are thinking of investing in a property, now’s the time to take action. At OzBroker, we’re experts in mortgage for investment property and home loan for investment property. Let us make your property investment journey smoother and less stressful.

Time is ticking, and great investment opportunities won’t wait. Book your call with us now, and let’s turn your property investment dream into reality.

Got any questions? Need further advice?

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