One great aspect of property investment is the ability to earn a steady stream of rental income. This is not possible with other types of investments such as shares, stocks or deposits. Investing in property lets you receive payments weekly or monthly and help you with your personal cash flow.
Before you start looking for the right property, however, it is important to sort out the money needed to purchase and operate it. Management rights experts from ResortBrokers.com.au suggest considering your budget to handle upfront expenses and ongoing costs for maintaining the property.
Apart from the down payment and borrowing costs, you will also need to budget for pre-purchase inspections. This is essential to avoid any surprises such as pest issues, building defects or illegal work that could be costly to fix. A strata search is also essential, particularly if you’re investing in a building or a unit that is comprised of other owned units.
Another key upfront cost you should be prepared for is the stamp duty or state government tax. The cost of this is added to the capital value of investment, so it will lower capital gains that apply when you try to sell your property. Conveyancing fees are also part of the equation and cover the cost of transferring the property’s ownership.
When owning and tenanting your property, you will incur a variety of ongoing expenses. These include tax agent fees, council and water rates, and body corporate taxes. You will need to have a budget for insurance to cover the value of your investment property. A landlord insurance is a good choice, as it offers a comprehensive level of protection, including the damage done by tenants.
If the property is professionally managed, you will need to pay fees to a real estate agent. Other expenses you need to budget for include leasing expenses, land tax, loan interest and repair and maintenance costs.
Property investment means having a long-term asset that will take some time to build your wealth. Keep in mind that while you may not see the profits immediately, your investment is continually working little by little to provide cash flow.