4 costs that peo­ple tend to over­look when in­vest­ing in prop­erty

Wangaratta Chronicle - North East Property Guide - - PROPERTY GUIDE -

It is all about the money when it comes to in­vest­ing in prop­erty, and pre­par­ing your­self fi­nan­cially is ab­so­lutely es­sen­tial and will save you a lot of fi­nan­cial stress and bag­gage in the long- term. We have put to­gether four of the ma­jor costs that you need to keep in mind when in­vest­ing in prop­erty.

Stamp duty

This might come across as a no-brainer cost to in­clude when look­ing to in­vest in a prop­erty, but many a time peo­ple get car­ried away by the price tag on the house and for­get about the stamp duty that comes with it. Stamp duty dif­fers from state to state when it comes to in­vest­ment prop­erty, thank­fully how­ever, there are some gov­ern­ment in­cen­tives to­wards stamp duty for in­vestors and first-time home buy­ers. In ad­di­tion to all of this, you will have to con­sider the cost of the de­posit that will be re­quired from you of which can range from 5%-20%.

On­go­ing costs

In­vest­ment prop­er­ties come with a lot of ex­penses at­tached to them such as coun­cil rates, body cor­po­rate fees, and util­i­ties. You will have to bud­get for these costs im­me­di­ately into your bud­get. Home loan ac­count fees and mort­gage re­pay­ments are some­thing that will be one of your ma­jor ex­penses in terms of on­go­ing costs.

When it comes to han­dling home loan and mort­gage re­pay­ments CEO of Savvy Bill Tsou­valas ad­vises con­sumers that ev­ery 24 months, home­own­ers should com­plete a home loan health check with their trusted ad­vi­sor.

“That in­volves get­ting in touch with your bro­ker, out­lin­ing the cur­rent fees and charges and in­ter­est rate. Too many peo­ple, once they’ve got their ini­tial loan, put it out of sight, out of mind, but it re­ally pays off to re- eval­u­ate.”

Pro­fes­sional ser­vice fees

Dur­ing the pur­chas­ing process of the prop­erty, it is likely that you will en­list the help of pro­fes­sion­als to help smooth the process and give you in­sight into whether you are mak­ing a sound in­vest­ment or not. These are known as le­gal and con­veyanc­ing fees. Le­gal fees and con­veyanc­ing fees vary de­pend­ing on the house and per­son­nel you choose to han­dle this. Con­veyanc­ing fees will cost you on av­er­age $900 of out of pocket ex­penses.

Re­pairs and main­te­nance

As a prop­erty owner, you will be re­quired to keep the premises in a rea­son­able state for peo­ple to in­habit, which means a gen­eral cy­cle needs to be main­tained where you re­pair and main­tain your prop­erty. How­ever, if you have em­ployed a prop­erty man­ager this can be taken care of in an al­lo­cated bud­get for them. Whether you are pur­chas­ing a ren­o­va­tor’s de­light, rental prop­erty or what­ever type of prop­erty run your num­bers and do the rea­son­able checks to avoid pur­chas­ing a prop­erty that needs ma­jor renovations.

Au­thor: Bill Tsou­valas is CEO and man­ag­ing di­rec­tor at Savvy, fi­nan­cial in­sti­tu­tion fo­cus­ing on au­to­mo­tive fi­nance and mort­gage. He has a been work­ing in the mort­gage & as­set fi­nance in­dus­try for over 10 years. He of­ten writes ar­ti­cles on mort­gage, fi­nance, and in­sur­ance top­ics.

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