When purchasing an investment property, it’s important to factor in the ongoing costs of ownership lest you be left paying for an expensive lemon.
On top of your home loan repayments and bank fees, owning an investment property comes with some ongoing costs. Before taking the leap into the investment market, it’s important to weigh these costs against your expected profits to determine whether owning an investment property is right for you.
Here are some common costs that will likely come with your investment property…
- Landlord’s insurance
Taking out landlords’ insurance will protect you against damage caused by floods, fires and other natural disasters. Certain policies will also cover costs associated with damage caused by the tenant, and even rental losses you may incur while your property is being repaired.
- Council rates
While of council rates differ between areas, it is an ongoing expense that you’ll need to account for. They are usually payable quarterly.
- Water rates
Some landlords choose to pass water rates onto their tenants. Either way, it is a another quarterly expense that needs to be covered.
- Strata fees
If you own an apartment or townhouse in a complex managed by a body corporate, you may have to pay annual strata fees that cover the upkeep and maintenance of common areas. Keep in mind that complexes with pools, gyms and gardens will likely attract higher strata fees.
As a landlord, you are legally obligated to ensure the safety of your property. That means you should never let maintenance requests slide. It’s better to fix small problems than let them spiral into much larger ones.
When your existing tenant moves out, you’ll need to relist your property on your selected listings websites and newspapers. The quality of your marketing will influence the calibre of tenants you attract, so try not skimp on this expense.
- Property management
Engaging a property manager will save you time and stress. It also provides the peace of mind that comes with knowing you have an expert looking after your legal interests. And their advice on maximising your profits will likely pay for itself.
The following advice is of a general nature and intended as an opinion and broad guide. For all legal, financial or real estate advice you should obtain independent professional advice to do with the specific nature of your circumstances before making any legal, financial or real estate decisions.