Hi Guys,
As a complete novice trying to work out a budget for my first investment property – I was hoping some of the more experience punters might be able to provide some figures for all the ongoing costs that I will be up for. I am particularly interested in QLD, however advice from any state would help.
The property will be at the lower end of the market, say $250,000 – $300,000 and I am keen to find out about the charges for a property manager, relevant insurances (house, landlords etc), council rates, water charges and what ever else that I may be missing. I know the figures or %’s will be rough but any guidance would help at this stage.
Cheers
Hi Glasco,
Welcome to the forum.
The costs can be split into two – closing costs and ongoing costs.
Closing cost includes things like stamp duty, loan establishment charges, solicitor/conveyancing charges, etc. Typically these costs are around 5-6% of the purchase price.
Ongoing costs includes things like council rates, water rates, insurance, body corporate, property manager’s fees, etc. These costs vary depending on the type of property you buy and it is very hard to give an approximate figure for these costs. For a free standing $300k property, you might be looking at around $1000 rates, ~$500 water rates, ~$500 insurance, ~7-8% property management fees, etc.
Hope this helps.cheers,
Sanjiv Gupta“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
Allow about 20% of the rent to be eaten in costs.
This is usually an over-estimation – no nasty surprises.
Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
Hey Sanjiv,
you changed your name to “PropertyPower” – what’s happening there. Sounds like a new business name?Cheers,
Marc.
[email protected]“we get sent lemons; it’s up to us to make lemonade”
Hi Marc,
Yeah, baby steps towards starting a business.
I intend to have something up and running by end of the year or early next year.cheers,
Sanjiv Gupta“There is no passion to be found playing small – in settling for a life that is less than the one you are capable of living.†– Nelson Mandela
The other posts have helped analyse the purchase costs in Qld but remember if the loan is not structured correctly then your loan costs could run in 4% of the purchase price if you include mortgage insurance.
Whilst loan costs are a deductible expense if you can avoid them or reduce them then that is certainly the way forward.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
New Shared Equity scheme has arrived – Email us for details.Richard Taylor | Australia's leading private lender
Hi Glasco,
I think Sanjiv has given you a sensible price guide there. To make buying your first IP easier, you can also download for free a “Property Budget Planner” off our website (see below), plus I’m sure you’ll find heaps of other useful information.
AmandaBS
http://www.propertydivas.com.au
FREE online Property Resources“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”
Thanks for the help guys – very much appreciated – Glasco
say its $300,000 then expect to rent it for $280ish if you can. 8% of that goes to property management fees. Typically about $500 / year on maintainance. Rates $2,000 per year. Insurance $500/year.
When you get a loan you will probably be up for 4% mortgage insurance. Then when you sell, 2% in commision and 25% to 50% of your total profit to capital gains tax – reguardless of inflation over that time.
Interest will be about $22,500 per year.
Hi Glasco,
Other cost to consider are Body Corporate Cost if applicable, Stamp Duty, if its an Investment Landlord Insurance.
In relation to Finance there can be costs from $500 to 5,000 depending on the property and who you lend threw.
Managing your property in Melbourne can cost between 5% to 7% and one and a half weeks rent but l am not sure what it costs in QLD….l have been in property for 10 years and also own my own finance company so if you have any further questions please feel free to ask….
Cheers
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