Have you ever owned or thought about owning an investment property?

You often hear experts constantly talking about "do your research". What they are talking about is the property itself. Is it in the right location? Is the building in good condition and suitable to rent out?

Research also means costs ie purchasing and ongoing.

Buying costs include the purchase itself and:

• Stamp duty
• Transfer fees
• Registration fees
• Loan establishment and settlement fees
• Legal fees

Another area is the ongoing cost. These can include:

• Shire Rates
• Body Corporate Fees
• Insurance
• Water Rates
• Repairs & Maintenance
• Loan Repayments

The difficulty is working out an estimate of what the total expenses will be for an average year. Loan repayments are easy to work out but what about the rest? We have researched these costs  and come up with figures of about 30% for houses and 25% for units as a guide compared to rental income. This is outlined as follows:

House                                                           Unit

Rental income    $870 pm         Rental Income    $760 pm

30%                      $261 pm         25%                       $190 pm

                               ---------                                           ------------

                               $609 pm                                       $570 pm

With this as a guide you can deduct the loan repayments to see whether you have a surplus or a shortfall.

Most people who sell an investment property after a few years do so because of the shortfall that comes out of their pocket each month. Every time a repair bill comes in, a comment is made like ? Why did we buy this property, it is costing us money each month? And this is what many people hadn't expected with an investment property.

We are not trying to persuade you against buying an investment property, just making sure you go in with your eyes open and research both the property itself and ongoing costs.

Happy Investing