Rental Property Expenses For Investors
Buying an off the plan investment unit in a capital city CBD area is a tried and tested strategy for portfolio diversification and the market in Australia is very well developed. One of the upsides of operating in a fully fleshed out marketplace is that many of the services that you may need to call upon to care for your investment are readily available and local competition generally ensures fair and reasonable pricing.
As with any residential investment property there are the standard fees that every investor is aware of such as Body Corporate fees, local taxes, property management fees and in some instances water charges. There are also the fees related to banking and interest if the investor has taken out some kind of financing to purchase the property. These costs are usually very well known to people looking to buy into the property investment market as there is considerable literature available online regarding these matters.
One thing that can catch first time investors unaware are the number of ancillary services and costs that you can incur with your investment property. When you need to find a tenant for your apartment there are listing fees to get your property posted prominently on the online listing services. Your real estate agent may also suggest that you have professional photography done if the unit doesn’t have recent images or if the apartment is brand new off the plan. If the unit was previously tenanted then there will also be some cost associated with having the unit cleaned professionally before the new tenants move in. There is also a one-time rental commission due to the real estate agent who rents out the unit for you.
Aside from the costs associated with renting out the property investment, there are general costs associated with proper maintenance and upkeep. From time to time there may be general wear and tear issues such as plumbing work that needs to be done. In some properties you may be required to have regular pest control carried out on the property.
One of the distinct advantages of buying a brand new off the plan property is that many of these kind of maintenance issues will not be an issue over the first few years. New units and properties also have the added advantage of having warranties and guarantees in place with builders so that some issues may be covered and carry no additional cost for the investor. Like any investment, it is a good idea to seek out advice from a range of experienced professionals in the property industry.
One thing that you should certainly do when you make the decision to buy a residential investment property is to seek out financial advice from a qualified accountant. Your accountant will give you advice about how to best maximise the tax effectiveness of your expenses around your investment property. Many of the expenses that have been discussed above have tax implications so properly tracking these costs and discussing them with your accountant will help ensure you get the best return on your residential property investment.