Investing in property is a goal for so many of us. As a nation, we’re in love with property and the riches that it promises.
Which is why it’s really important to know your numbers before you sign on the dotted line. What impact will this property have on your cashflow? What impact will that have on your lifestyle?
So firstly, you need to know why you’re investing. Are you investing to reduce your tax or build a legacy?
Then you need to know what it’s going to cost you to make the actual investment.
- Purchase price
- Deposit
- Stamp duty
- Conveyancing fees
- Lending fees
- Building/completion inspection
- Depreciation schedule (if it’s a new build)
- Any other costs that may be included
Then you’ll need to look at the ongoing costs – the best AND WORST case scenarios for cashflow of the property.
- Mortgage repayments (current interest rate as well as a higher interest rate)
- Property management fees (include two leasing fees per year in case you have tenants who like to move)
- Landlord’s insurance
- Strata levies (if it’s in a strata complex)
- Maintenance savings
- Rates, water and any other ongoing expenses
Finally, the really worst case scenario. What if there is a special levy for building maintenance or major works required, or you have an extended period of vacancy? How will you afford those?
Don’t get me wrong, I love investing in property and am a huge supporter of investors. But you must go in with your eyes wide open.
If you can’t afford it today, wait until tomorrow.
If you can’t afford that property, find a cheaper one.
Don’t sacrifice your lifestyle and peace of mind for a dream that can be put off until you’re in a stronger financial position to make it happen without the added stress.
