Costs Involved in Investing in Australian Real Estate

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Costs Involved in Investing in Australian Real
Estate
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The Australian property market is dynamic in
nature. It means it is constantly changing.
Understanding and leveraging the true potential
of the market is essential to stay at the top of
the game. But if you are someone who is new to
the market or if you are unable to learn about
the frequent changes that the Australian real
estate market goes through, then you need a
professional, licensed, and dedicated agent by
your side. To learn and seek answers about any
real estate needs, contact Carlton Vaz, the best
real estate agent, offering his expertise in
Hampton Park, Lynbrook, Lyndhurst, Cranbourne and
nearby suburbs. Having a seasoned professional
with you will help in getting to the depth of the
matter. You will get clarity over things that
otherwise you may not understand the most
common of all is costs involved in investing in
Australian property market. Other than the
changing laws, it is the statistics and the
figures that make people go crazy. So, to help
you out, we have come up with this blog. It will
tell you everything about different costs
involved while investing in Australian real
estate market. So, let us get started! There are
many costs associated with property investment
such as upfront loan costs, upfront buying costs
and the ongoing costs of owning the
property. Investing in Australian property is
enormous. The stats with the Australian Taxation
Office (ATO) show that there are more than 2.15
million property investors throughout the
country. The ATOs stats show nine out of 10 of
those 2.15 million people own just one or two
rental properties at most. Only less than 1 of
investors fit into the category of having six or
more rental properties. Even though investing in
property brings in good wealth, it is at the
same time a risky and expensive process. There
are different costs involved in Australian
property investment such as
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Home Loan Costs for Australian Real Estate
Unless you have enough cash to purchase an
investment property, you will need a good value
home loan to make such a big purchase. Most home
loans come with fees and mostly all of them will
charge interest after all a loan is not a
charity. Other home loan fees involved in
investing in Australian property are as follows
Lenders mortgage insurance Ongoing fees Loan
establishment fees Break costs Interest
payments We will briefly explain these below.
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Lenders Mortgage Insurance (LMI)
Lenders mortgage insurance (LMI) is an insurance
policy which covers lenders against losses in
the event that the borrower can no longer meet
their loan repayments / defaulting. You can
avoid paying LMI if you have a deposit of about
20 of the propertys value or greater, or if
you use a guarantor. But if you have to pay it
can cost you thousands of dollars.
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Loan Establishment Fees

• It is also known as an application fee. It is an
  establishment fee, basically a one-off payment
  at the beginning of the loan to pay for the
  processing documentation. Not all lenders charge
  this fee, but those who do will often charge
  around 250 and the maximum can be as high as
  800-1,000. So, be aware!
• You can also be charged a valuation fee but at
  times it is bundled into the establishment fees.
• Even the state governments charge mortgage
  registration fees to register the property as a
  security on a home loan.

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Ongoing Loan Fees
Just like an application fee, your home loan may
also come with an ongoing fee. It is usually
charged annually. Yet again, not all lenders
charge this fee but common costs can be around
100 to 180 per year. On the other hand, some
can even charge up 400.
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Interest Payments
Although not a fee, interest will generally be
your biggest cost of a home loan. A low interest
rate on your property investment can save you
tens of thousands of dollars. Investment home
loans usually carry higher interest rates on an
average than an owner-occupier loan, which means
a higher interest cost.
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Property Buying Costs
While the above-mentioned fees apply to the home
loan, there are some other costs too that you
must consider while making an investment in the
Australian Real Estate. The fees are as
follows The deposit Solicitor and conveyancing
fees Stamp duty
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Landlord Insurance
This insurance policy is to protect the interest
of those who own the investment property
(landlords). This policy works in conjunction
with homes and contents insurance. But it also
has a coverage to protect against loss or any
damage that may arise from tenancy issues such
as loss of rental income, theft or damage to the
property.
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Land Tax
This is another cost that you have to pay in
order to buy a property. What is a land tax? It
is an annual cost levied on the owners of the
land and not the property itself. This tax is
levied by the state governments, excluding the
Northern Territory. So, the cost can vary
depending on the worth of the land.
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Property Managers Fees

• This is equally essential because if you own an
  investment property in Australia, you are likely
  to employ a property manager to take care of it.
  For that you will have to prepare the budget
  accordingly. Having a good property manager by
  your side means everything from collecting rent,
  finding tenants, maintenance of the property
  etc., is taken care of by the professional you
  hire.
• Depending on your state and the property manager
  you choose, a property manager can cost from
  around 5-12 of your weekly rental income.

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Advertising for Tenants
This is probably the final cost you will have to
factor in while investing in Australian property
real estate. This is especially when you want
tenants to live in it. Unless you do not want to
receive a rental income, you will need to find a
tenant and for that you may have to advertise
extensively. Doing a little research or hiring a
good real estate agent in Hampton Park or nearby
suburbs will always be of great help to you. A
good real estate agent like Carlton Vaz will
guide you throughout the journey. So, whether it
is to know about different costs involved in
Australian Real Estate or anything else in terms
of real estate, do not hesitate to contact us.
Jasmine Real Estate is here to meet all your
real estate needs. Call now.
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Get In Touch
PO Box 137 Lynbrook Victoria 0425843786 carlton_at_
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