When you’re living in a house, it’s easy to see the little expenses that add up over time. From plumbing fixes to the basic maintenance tools needed to keep the place looking clean and tidy, taking care of a property is a slow process that is always happening in one way or another. It can, however, come as quite a shock to those who invest in a house or apartment, many of whom may not have had these ongoing costs in mind when it came to a property that they weren’t necessarily going to be calling home.
At My Rental, we are dedicated to making sure that our clients have all of the information they need when it comes to making property decisions. So, let’s take a quick look at the ongoing costs that you can expect as the owner of an investment property.
Let’s start with one of the more well-known costs of property investment: loan interest. Assuming you purchased your property with a loan from your bank, they will be wanting to make a return on their investment, which often comes in the form of interest.
At the time of writing, Australia’s cash rate is at a historic low (0.10%). This number refers to the rate at which financial institutions charge out loans from other institutions, and will generally impact the interest rate for those borrowing from those institutions. With that said, as “historic low interest rates” suggests, this number is usually higher and must be taken into account when calculating your costs annually to avoid any nasty surprises sneaking up on you.
Insurance is an important ongoing expense for anyone that owns a home, whether they live in it or not. There are specific insurance plans set up for investment property owners, such as landlord insurance, which allow you to keep your assets protected. This can be especially beneficial for those that are leasing out their property, as damage incurred by renters can come out of pocket if adequate protection is not in place.
It’s hard to say how much landlord insurance will cost on average given that there are so many factors that make up the final annual cost you’ll receive, such as the value of your home and the state in which your house resides. Some statistics suggest an average of approximately $208 per month, but this is based on a number of variables and likely won’t reflect in the price you end up paying.
Either way, this will likely be an ongoing charge for your entire ownership of the property. So, plan ahead, and make sure that you are doing your research to avoid higher fees than may otherwise be necessary.
Whether it’s due to the elements, tenants, or simply unforeseen circumstances, homes can get damaged and fall into disarray, and when they do, someone has to go in and fix it. It might be a burst pipe, it might just be that the garden has become overgrown and consumed any sense of order it may have once held. Whatever the case may be, maintenance costs money, and that money is more likely to be yours than not.
Depending on the value of your property, especially if you are renting out that property to third parties, continuous maintenance is vital for keeping your investment viable and desirable. You may have a stunning garden and two storeys of luxury, but if your pipes don’t work and there’s black mould in the bathrooms, you’re not looking at a lot of rental options.
Taking care of your property will pay off in the long run, and avoid smaller issues turning into larger issues when left unchecked. So, stay vigilant, and try to budget your maintenance costs early on in the homebuying process.
There are, inevitably, a number of costs associated with having a council, especially one that is quite active in providing infrastructure and other services to the surrounding area. This means that they need funding to come from somewhere, and in most cases, that “somewhere” is the council rates paid by homeowners in the area.
How much you pay to the council will be dependent on property values, and these payments will usually be quarterly. For more information on council rate prices in Victoria, click here.
Whilst some owners do go through the process of managing their own property, this can be very time consuming and difficult to keep up, especially alongside other jobs and obligations that can take you away from your ability to deal with tenants. That’s why property management services such an important tool in the arsenal of a landlord, allowing you to reap the benefits of an investment property without having to deal with the required minutia of upkeep.
At My Rental, we have been providing some much-needed innovations to the world of property management in Melbourne, using state-of-the-art technology to offer landlords the above & beyond service they expect without the above & beyond fees. To learn more about property management and what we can do for your investment, contact My Rental today.