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Investment property is a prestigious business in Australia, and many investors find it profitable enough to spend large amounts of money. Whether you’re a professional investor or want to add wealth into your pocket, buying or owning an investment property is worth the shot.

However, it doesn’t come without associated costs and fees. There are over 2.15 million property investors in Australia, but only a few own more than two properties. So, not everything has the heart to make a huge financial commitment. So, understanding the upfront loan costs, ongoing costs of owning a property, and legal fees on the purchase of the property is essential.

Besides one-time deposits and repayments on a home loan, these additional costs can reduce your chances of enjoying massive profits. So, let’s understand in detail all the actual costs of buying and owning an investment property in Australia.

1. Property Management Fees

A property management fee is the first and foremost expenditure that adds to investment property costs. Usually, you’re connected with a realtor when purchasing an investment house or property. Property management fees are the charges you pay to a real estate or property agent, depending on your chosen services.

Several services by a property agent include finding tenants, managing rental properties, etc. The costs of these services vary from agency to agency. Solely connecting to tenants and looking for investment property Australia may be hectic. That’s why paying property management fees to a realtor for a crumb of your whole budget is a sound investment.

2. Stamp Duty

Stamp duty is the tax charged on residential property in Australia. It covers a wide range of costs, such as real estate agent commissions, legal fees, valuation services, and other expenses. In general terms, stamp duty is calculated as a percentage of the purchase price, with rates varying from state to state.

For instance, if you plan to purchase an investment property for rental purposes, you may have to pay stamp duty if your property is worth more than $750,000. Or if you plan on renting out your property for at least six months.

If you are conscious about investment in real estate, you should pay attention to budgeting first instead of blindly jumping into the rat race. The estimate of the taxes, like stamp duty, may help you decide the best investment plan.

3. Ongoing Loan Fees

Ongoing loan fees are also included in the costs of buying a house. Ongoing costs of owning a home in Australia are any additional charges that your lender applies combined with the overall interest. Ongoing costs of owning a home or an investment property are usually charged annually.

Not all lenders charge ongoing loan fees, so its rate varies from lender to lender. Generally, ongoing loan fees are quite low, ranging from 100 to 400 AUD. The ongoing charges may be low, but still, they make up a considerable amount of the investment property costs.

4. Loan Repayments

After getting a property of your interest through a mortgage, the next step is to repay the borrowed money, and loan repayments are a great way to do so.

Loan Repayment is the amount you need to pay to maintain the property, including the principal and interest on your mortgage. The average investor usually has a mortgage on their investment property, so it is vital to know how much you will pay back each month.

It is an essential aspect of owning an investment property and gives you the facility of repayment through monthly, weekly, or fortnightly options. Additionally, you can purchase your property with a deposit to use it as security against the loan. It will allow you to borrow less money which means lower monthly repayments.

5. Pest and Building Reports

The pre-inspection of your home or investment property before buying is crucial to discover underlying damages. This way, you can remove the hassle of making essential repairs that could cost you a fortune. So, it is better to consider licensed building inspectors to check the structure and condition of the premise thoroughly and spot the areas that need fixation.

By issuing pest and building reports, they indicate pest infestation that may worsen over time. The report also includes assessing electricity, gas, water, environmental problems, and fire risks.

The most efficient approach is to go for the companies that offer pest and building inspection under a joint package making the process cost-effective.

6. Home Loan Break Costs

Home loan break costs are also a considerable part of investment property costs. In most cases, the investor doesn’t pay for their new property outright and takes a home loan with suitable interest rates. Home loan break costs, like any other loan break charges, are the security money you pay to the lender, so they won’t make a loss if you pay your loan before schedule.

Home loan break costs also apply if you switch your product, change interest rates for financial reasons, or reform payment terms during a fixed period. Home loan break costs must not be confused with interest as both are different entities.

7. Mortgage Registration Fees

The mortgage registration fees are the charges you pay to the government or relevant authorities to register the security for a home loan. Simply put, you register your desired property as a security on the home loan. Mortgage registration fees ensure that future buyers can check for any claims on an existing property.

Generally, these charges are paid when your lender discharges the home loan or establishes it. The exact cost of mortgage registration fees varies from state to state. Normally, it ranges from 100 to 200 AUD. You must pay the mortgage registration fees in the initial stages of the process; thus, it must be included in the investment property expenses.

8. Insurance Costs

Insurance costs aren’t fees associated with buying a house but are required for getting your home loan. Moreover, as an investor, it’s wise to insure your property for any future damages. In the case of investment property in Australia, it’s also advised to get landlord insurance.

Landlord insurance will cover your financial losses associated with rental properties and issues. Insurance is a must-have, especially for investment properties; thus, these costs must be considered when calculating investment property costs.

The Spirited Team of The Hawks Group Can Help You

It is undoubtedly true that understanding all the costs associated with buying and owning an investment property isn’t a simple task. Even after reading all the costs, many of you may still be confused. So, how are you going to prepare yourself for a big financial commitment without understanding the real costs all along the way?

Investment property costs are diverse, and without the help of a professional real estate agent, you can’t make an informed decision. The best way to deal with such a situation is to leave the matters to the The Hawks Group. The team at Hawks is skillful, passionate, and knowledgeable in what they do.

We’ve in-depth knowledge about the Australian real estate market and can help you go through all the processes of buying an investment property seamlessly. So, what are you waiting for? Get in touch with one of our real estate agents today and take the burden off your shoulders!