The Costs Involved in Property Investment

Property investment builds wealth providing you make
sound decisions that create excellent financial returns.
However, there’s an art to investing right. So, before
you rush out and start buying property, you need to
do your research and consider the upfront costs involved
in property investment. Then, you can determine if
property investment is affordable for you.
Let’s look at the costs you may encounter and
just how expensive these may be so you can
adequately budget when looking to buy an investment property.

Stamp Duty

Stamp duty is a government cost that differs from state-to-state.
Though, in most cases, it is dependent on the purchase price of
the property. Some states also offer first home buyers stamp duty
exemptions. So, it pays to review your eligibility.

How does stamp duty affect you?

Stamp duty can:

  • Add thousands to the purchase price of an established home or land.
  • Be an unexpected cost.
  • Get calculated as a percentage of the total purchase price of a property.
  • Vary in cost from state-to-state.

Calculate Stamp Duty using eChoice calculator

The Deposit

If you don’t have home equity, then you’ll need to save
a deposit before buying an investment property. Sure,
you can borrow more than 80% of a property’s value,
but you’ll have to pay Lenders Mortgage Insurance (LMI).
This insurance can add tens of thousands to the cost of
property and is an additional cost that you should look
to avoid, if possible.

Who does LMI protect?

  • LMI is lender insurance that protects the lender against loss.
  • Should you default on loan repayment, LMI covers the lender’s costs.
  • As a borrower, LMI is of no benefit to you.

Land Tax

Your primary place of residence is exempt from land tax.
Nonetheless, an investment property may attract a fee.
Once again, this tax varies from state-to-state.

What are the terms of land tax?

The amount of land tax payable depends on the
state the property is in, and the value of the property.
Other considerations are:

  • Land to a certain value is exempt from land tax.
  • After you reach the threshold, you’ll have to pay an annual fee.
  • Tax is only payable on the land value, not the home.

Council Rates

Local council taxes apply to property you purchase.
These fees vary depending on the council that governs
your property and the estimated value of the home.

What does this cost cover?

This property investment cost typically covers:

  • Road and footpath, kerbs, channels and drain maintenance.
  • Rubbish collection – though some councils charge extra.
  • Sewerage and light maintenance.
  • Infrastructure and services.

Click to compare

Corporate Body Fees

Should you purchase a townhouse, unit or apartment,
this will attract a corporate body fee. This fee covers
the costs of maintenance and insurance for the grounds
and buildings. All complexes have varying fees depending
on the property type purchased and the size of the actual property.

How much are corporate body fees?

  • These fees can be anything from a few hundred dollars
  • per quarter through to thousands of dollars.
  • Fees typically vary depending on the size of the complex.
  • So, the more apartments or units, the larger the fee.
  • The more amenities offered by the complex – tennis court,
  • pool and gym – the higher the fees.

Utility Costs

When you first buy property, you’ll need to ensure the installation of all utilities.
These include water, electricity, and gas, if available. While your tenant handles the connection and usage cost to all utilities, except water, you’ll need to manage the initial utility set-up.

What utility costs apply?

The costs you can expect to pay include:

  • Initial water connection and ongoing sewerage fees.
  • Gas and electricity installation and upgrades.

Emergency Services Levy

Any property attracts an emergency services levy. This fee
pays for the metropolitan and country fire service, state
emergency services and marine rescue.

How is the fee calculated?

The services levy is governed by:

  • Investment property values as determined by your
  • official council rate notice, not market value.
  • Your property’s location – regional or city code.
  • The fixed council fees.

Buying Investment Property?


Leave a Reply

Your email address will not be published. Required fields are marked *

RSS C J Investiment

  • Greatest Depreciation Impact on buying brand new property versus second hand property. September 17, 2019
    The recent depreciation changes have the greatest impact on the types of property you may choose to invest in. Some people prefer to invest in brand-new properties, while others opt for older property that they can renovate and resell for profit. Washington Brown, who are the property depression experts and accredited surveyors in Australia and internationally do […]
  • How to Use Leverage to Build Your Business Effectively September 7, 2019
    Leverage is simply doing more with less. When we mentioned leverage in this context, money is what people think of most often.  Loans, mortgages, other people’s money – all are forms of leverage based on money. While this type of leverage is important, it is equally important to use other forms of leverage in your business strategy.  Your Wealth Team Systems […]
  • Some incredible deals available for people who can refinance September 4, 2019
    The market is changing fast. Banks are again showing an appetite for interest-only loans again. And many lenders have reduced their assessment rates by up to 2.0%, which represents an increase of approximately 12-15% in your borrowing capacity. There are some incredible deals available for people who can refinance.  Secure a complimentary loan review with our JV partner, EK […]
  • World Recession and its impact on housing prices September 3, 2019
    According to economist discussions in many fora, recession is on the horizon. Well,let’s take an in-depth look at what’s occurred recently and in the past, so we can put your mind at ease about the word recession and its impact on housing prices. The official cash rate sits at 1 per cent. The Australian dollar fell to 0.67% […]
  • How I started Real Estate Business September 2, 2019
    Many people ask me why I started real estate entrepreneurship instead of sticking to my Nursing Profession. I tell them that as much as I enjoy my Nursing Career, the one disadvantage of it is that I trade my time with a dollar. That is if you don’t wake up to go and work, then […]
  • How to Sign a Rental Lease Agreement With Your Tenants September 2, 2019
    In order to sign a rental lease with your tenants, you will need to have – of course – a rental lease. You can get a state-specific lease agreement from a number of sources, such as Government Agencies or your attorney. Each Region has different rules and laws that govern the landlord-tenant policies in that state, so chances are a […]
  • How to Rent Your House to the Best Tenants September 2, 2019
    The most important decision you make that will determining the success or failure of your rental is the person you put in. A bad tenant can potentially cause years of stress, headache, and financial loss – while a great tenant can provide years of security, peace, and tranquility. Don’t underestimate the important of renting to only the best tenants.You are reading […]
  • Money Management Strategies for People In Diaspora August 31, 2019
    Here are some ways workers living overseas can manage and protect their money for better long-term financial health. Open a local bank account A local bank account can help you save money on extensive ATM fees. It’s also a good thing to have for making deposits each time you get paid. When you use a foreign card […]
  • The Single Most Important Step You Will Take If You Want To Have A Successful Website August 31, 2019
    Everyone is looking for a short-cut to online riches and yet over 99% of those people NEVER use the informational products and money-making tools that they’ve purchased. We get too busy, or too lazy, or we simply procrastinate so long that we forget what we were intending to do in the first place. While there are a lot of […]
  • Double Your Productivity August 26, 2019
    If you read one article before starting your week, read this one. Set aside a few minutes and focus. I am going to share some habits that I’ve implemented myself that have resulted in massively increased productivity for me! I learned this strategy from my business partner,the creator of Rehab Valuator,Daniil Klyman. This article will […]

Google Translator

Recent Posts

Our Agents

Charles Vincent Kaluwasha

President and Founder

President & COO, C J Investiment LLC. Charles Kaluwasha has been a part-time entrepreneur and investor since 2008. He currently…