When most people think about the cost of an investment property, they think about the purchase price and the deposit. But buying a property comes with a range of other costs, and holding it brings more. Knowing what to expect helps you plan properly and avoid being caught short.
Upfront costs
These are the costs you will usually pay around the time of purchase.
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Stamp duty. Also known as transfer duty, this is a state government charge and is often one of the largest upfront costs. The amount depends on the state and the purchase price.
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Legal and conveyancing fees. A conveyancer or solicitor handles the contract, searches and settlement.
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Building and pest inspections. These help identify issues with the property before you commit.
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Strata report. For units and townhouses, a strata report shows the condition of the building and the health of the strata scheme.
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Loan costs. These can include application, establishment and valuation fees.
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Lenders mortgage insurance. If your deposit is below the lender’s threshold, you may need to pay this.
Ongoing costs
Once you own the property, there are regular costs to budget for.
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Loan repayments.
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Council and water rates.
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Strata fees for units and townhouses.
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Landlord and building insurance.
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Property management fees.
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Repairs and maintenance.
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Land tax, depending on your state and the value of the land you own.
The costs people forget
Some costs do not appear on any invoice but still affect your returns. Periods without a tenant mean no rental income while costs continue. Larger maintenance items, such as hot water systems or roof repairs, can arrive without warning. And changes in interest rates can shift your repayments over time.
Why a buffer matters
This is why experienced investors keep a cash buffer. It gives you breathing room when an unexpected cost arrives and means you are not forced into a difficult decision.
Plan with the full picture
Understanding the true cost of buying and holding a property helps you set a realistic budget and choose a property you can comfortably hold for the long term. Your accountant can also advise on which costs may be tax deductible.
Want help mapping out the numbers before you buy? Call the team at Mirren Investment Properties on 02 8814 5275 or book a free strategy session and we will help you plan your purchase with confidence.
This article is general information only and does not take into account your personal objectives, situation or needs. Please seek professional advice before making any investment decisions.
