Costs Involved in Investing in Australian Real Estate
                     Costs Involved in  
Investing in 
Australian  Real 
Estate
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 ATO’s 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;
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.
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 
property’s value  or greater, or if you use a guarantor. But if you have 
to pay it can cost you thousands  of dollars.
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.
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.
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.
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
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.
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.
Property Manager’s 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.
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.
Get In Touch
PO Box 137 Lynbrook Victoria
0425843786
[email protected]
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