Interested in making a property investment, but not quite sure how it all works? Don’t worry. You’re not alone. Here are some of the most commonly asked questions from first-time property investors:

What is Property Investment?

Property investment is when you buy real estate property with the intention of earning a return on it. This return can come in the form of rental income, or it can come through capital gains when you eventually sell the property.

Can I Use Equity in My Home as a Deposit?

Yes, you can. After several years of home ownership, it’s possible you’ve built up some equity. For example, if your property is worth $500,000 and you have $300,000 left to pay off your loan, then your equity is $200,000. You can use this to make a deposit on your investment property instead of trying to save up the cash.

What is Negative Gearing?

This is when you invest money in a way that causes you to lose money, which can then be claimed as a tax deduction. So if you make $20,000 in rent income, and your expenses total $25,000, you could claim the $5,000 loss as a tax deduction.

What are the Costs of Investing in Property?

Obviously, the most costly thing about investment property is the property itself. But beyond that, there as some things to consider, such as:

  • Mortgage registrations ~ $90
  • Annual bank fees: Varies bank to bank
  • Establishment/application fees for home loan ~$600
  • Insurance: Varies plan to plan
  • Interest on your investment loan: Varies
  • Conveyance/solicitor fees ~ $1000
  • Property valuation ~ $200
  • Pest and strata fees ~$200-600

The costs above are an approximate guide only. 

What is Stamp Duty and Do I Pay it When Buying an Investment Property?

Yes you will need to pay stamp duty on your investment property. This is a duty that state governments charge to those buying residential property. It’s not fixed but rather varies from state to state.

Do I Need a Lawyer or Conveyancer?

There are a lot of legalities to worry about when buying an investment property, so it will be important to name conveyancers and solicitors. You will rely on them heavily as you go through the paperwork involved in the sale. They do charge a fee, though, and it’s usually not cheap, so make sure you include this in your budget. Some will charge a flat fee, and others will charge a sliding fee based on the properties sale price. Make sure this is completely clear before you engage with anyone.

What are Strata Fees?

At the moment of the sale, the new owner takes on all the attached council and strata fees. Owners of houses and units alike are required to pay council fees. But only apartment or unit owners will have to worry about strata fees.

Strata fees are usedf to pay for the grouped maintenance and building insurance fees. These fees are ongoing, so you will always need to account for them.

What is the Role of a Property Manager?

A property manager can make the whole process of property investment go much smoother by:

  • advertising your property
  • assisting with showings
  • screening tenants
  • managing the condition report processes
  • managing lease agreements
  • inspecting the property

The information and links provided on this website are for general information only and should not be taken as constituting professional advice. This information does not take into account the financial situation or particular needs of individual readers. Before making any decisions about matters discussed on this website, you should consider whether it is suitable for you in light of your own circumstances, and seek appropriate advice.