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What are the ongoing costs of an investment property?

Before making the decision to buy an investment property it’s important to understand the ongoing costs involved.

  • Mortgage fees and repayments: This can include the interest paid on your home loan and, depending on what type of mortgage you’ve taken out, any associated bank and account-keeping fees
  • Council rates: These are usually due every quarter and cover essential services such as garbage collection in addition to community facilities. Check the website of the council you’re planning to buy in for more information
  • State government taxes: These vary between states and territories, but most charge an annual land tax
  • Strata/body corporate fees: These fees apply if you own a property that’s on some form of shared land or title, such as an apartment or townhouse
  • Utilities: Depending on your rental agreement, as a landlord you may be liable for some utilities such as water bills and fixed access charges
  • Property management: Property managers, should you use one, look after leasing and managing properties on behalf of owners for a fee
  • Landlord and tenant protection insurance: As well as the other types of insurance you’ll generally take out to cover your investment, you also might want to protect your property from unexpected costs related to renting it out, such as vandalism
  • Maintenance and repairs: As a property owner you will generally be required to keep the premises in a reasonable state of repair and as such may need to factor in paying for things like a new hot water service from time to time   
  • Advertising fees: These may need to be paid in the event your property requires new tenants, in which case you may also face a period without any rental income
  • Renovations and improvements: Depending on what you decide to undertake and how much you are willing to put into your property, these may be as straightforward as getting the walls repainted or a much bigger project such as updating the bathroom, for example, with the aim of making the property more attractive to prospective tenants
  • Income tax obligations will depend on whether you have your property positively, neutrally or negatively geared.

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