Anyone looking to invest in property should keep in mind a few costs that are associated with the venture. To help you better understand the process, we have put together some information on what costs you may encounter throughout the process of purchasing your investment property.
Upfront Costs You May Encounter
You can expect to pay legal fees and stamp duty when purchasing any property. These are the most common fees and almost everyone knows of them. However, others you need to be aware of that can cost money include costs to get the property inspected, research and strata reports, loan application fees, valuation fees, mortgage insurance (in some cases) and a cost to obtain a depreciation schedule.
Continuing Costs You May Encounter
Almost everyone is aware that you need to pay interest on your bank loan. Other factors to consider may include property and landlord insurance and potentially personal insurance for income, trauma and life protection. If you hire a management company to handle your property (which is highly recommended), the cost will be deducted automatically from the rent you receive. In addition, you may also be required to pay council and water rates depending on your rental agreement. Some units will require you to pay body corporate fees, but this will also cover some insurances.
It is often forgotten that appliances and fittings in your property will wear out over time and require repair or replacement. However, the cost of any damage by tenants outside of normal wear and tear is their responsibility.
These are some of the costs involved when purchasing a property. You should always be sure to get the correct professional advice and plan for unexpected contingencies. This way you will get maximum return on your investment with minimal stress.