Costs Associated With Buying An Investment Property

Costs Associated With Buying An Investment Property

There are a number of costs associated with buying an investment property – on top of the general interest repayments that many investors take into consideration.

Today’s article looks at 10 of the most common costs associated with buying your next investment property.

  1. Building and Pest Inspection

Once you’ve placed an offer on a property and the offer has been accepted its important to book an attend a building and pest inspection.

Older homes often have a number of hidden issues that you will not have noticed on your initial inspection. These issues can be minor, like replacing an old light, or major, like structural or building and pest issues.

A building an pest inspection will generally cost anywhere between $420 and $700 depending on the company you select.

A building and pest inspection is a necessary expense, which could end up saving you thousands of dollars if it brings hidden issues to your attention before you purchase a property.

  1. Accountant

As an investor its necessary to have an accountant in your team.

A great Accountant will help with your tax return and will pay for themselves many times over.

  1. Property Valuation

A property valuation is a hidden expense organised by your lender or Mortgage Broker to ensure you get finance.

A valuation is vital when purchasing a property, as the lender will not approve finance without first doing a valuation on the property and ensuring the house is worth the amount of money they are lending.

The lender needs to be confident in knowing that if you cannot make repayments and default on the loan, that the re-sale value of the house is going to cover the cost of the loan.

  1. Insurance

There are a number of insurance related costs associate with buying an investment property including:

  • Lenders mortgage insurance – LMI will be charged to investors who have less than a 20% deposit.
  • Landlords insurance – if the property is being bought as an investment, you may consider landlord’s insurance
  • Home and content insurance – the right home and contents policy should cover you for the structure and anything you have inside the property
  1. Research and/or Buyers Agent Fee

Its not cheap to subscribe to the databases that allow you to do the necessary research when buying property.

Websites like Real Estate Investar or RP Data have a subscription fee to allow you to access their data. This data is vital if you know how to use it effectively.

A buyers agent, will charge you a flat fee for their services, or a percentage of the sale price of the house.

A buyers agent is a licensed property professional that helps home buyers and investors purchase investment property.

Buyers agents specialise in researching, evaluating and negotiating the purchase of a property on behalf of their buyer.

  1. Mortgage Broker Fees

Generally speaking mortgage brokers are free of charge, as banks, upon approval of the loan, pay them. On occasion there can be a costs associated with hiring a mortgage broker.

  1. Stamp Duty

Stamp duty is one of the largest costs associated with purchasing an investment property.

The cost of stamp duty varies depending on the state and the price of your property.

  1. Legal Fees

Its imperative to have a solicitor or conveyancer to walk you through settlement.

Solicitors charge anywhere between $800 to $2,000, plus searches.

The final costs of a solicitor are dependant on how detailed you wish to be before purchasing your property and how many searches they recommend for you.

A solicitor should help with contract signing, ensure the settlement process runs smoothly, ensure everything is conducted legally, and save you from anything that can affect you in the future by doing all necessary due diligence.

  1. Property Manager

It is important to organise a professional property manager.

Property management fees vary from agency to agency and can be anywhere between 4.5 and 10% of the weekly rent.

Its also acceptable to negotiate on fees with most property managers.

How to choose the best property manager.

  • Quantity Surveyor

Its also a good idea to get a depreciation schedule done on your investment property to find out where you could be claiming deductions. Obviously arranging a quantity surveyor or depreciation tax specialist is going to cost you money, however they could end up saving you money on your investment by claiming deductions and depreciation on your property.


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Kristal Everingham


Kristal Everingham is a Property Acquisition Manager at Pumped On Property. Her mission is to show you how to replace your income through property investing so you can do what you love…full time.