Investing in real estate to build wealth over the long term is a proven strategy. However, there are expenses and fees associated with real estate investment beyond the initial deposit and mortgage repayments, and it's important to include these in your budget.
Stamp Duty
Stamp duty, also known as "transfer duty", is a tax calculated as a percentage of the property value when its ownership changes. It is imposed by state and territory governments, and all home buyers are required to pay it.
The amount varies depending on the purchase price and your location. First-time homebuyers may qualify for a partial or full stamp duty exemption.
Legal Fees
A conveyancer is a qualified professional who specialises in property sales. Conveyancers handle the preparation, review, and lodging of all legal documents and assist with various checks and due diligence before settlement, ensuring compliance with regulatory requirements. This includes tasks like conducting a title search to check for outstanding property debts and reviewing zoning regulations that may impact property value.
Conveyancing fees can range from $1,000 to $2,500, depending on factors such as property type, location, and transaction complexity.
Mortgage Registration Fee
This government fee varies by state or territory and is a one-time payment made when establishing a home loan. It registers the mortgaged property, providing a record for future claims and transactions related to the property. This cost is relatively small compared to other expenses.
Insurance Costs
Building insurance is crucial and required by lenders after granting full home loan approval. For apartment or unit investments, strata costs may cover some insurance requirements.
Still, as an investor, it's wise to consider landlord insurance, which protects against various risks related to tenancy, including loss of rental income and property damage.
Maintenance Costs
Landlords are responsible for property maintenance, including repairs, and regular maintenance tasks like painting. While tenants may handle certain minor tasks, most repairs and maintenance are the landlord's responsibility.
Property Management Fees
Property management fees apply if you engage a property agent's services and can vary based on the extent of services provided, from finding tenants to ongoing property management, tenant relations, and maintenance.
Above are some of the costs and fees associated with entering the investment property market. For more detailed cost information and guidance, please contact the professional mortgage brokers at MoreMore Finance.
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