Costs Involved in Investing in Australian Real Estate

Costs Involved in Investing in Australian Real Estate

The nature of the Australian property market is dynamic which means it is constantly changing. Understanding and leveraging the true potential of the Australian Real Estate market is crucial for staying at the top of the game. But if you are someone who is new to the property 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, a licensed, and a dedicated real estate agent by your side. To learn and seek answers about real estate, contact Manny Singh, the best real estate agent who offers his expertise in real estate in the areas of Hampton Park, Narre Warren, Pakenham and nearby areas.  

When you have a professional real estate agent by your side, you get to the depth of the matter. Also, you will get some clarity about the process that otherwise might be difficult for you to understand, especially when it comes to real estate.  

The most common aspect of all is to know the cost involved in investing in the Australian property market.  

Apart from the changing real estate laws, it is the statistics and the figures that make people go crazy. So, to help you, we have come up with this blog. Here, you will know everything about the costs involved while investing in real estate.  

Let us get started! 

There are many costs associated with property investment like upfront loan costs, upfront buying costs and the ongoing costs of owning the property.  

Investing in Australian property means a huge amount of money is required. As per the stats with the Australian Taxation Office (ATO), 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 only one or two rental properties at the most. Only less than 1% of investors fit into this category of owning six or more investment/rental properties. Even though investing in property gives good wealth, it is at the same time a very risky and an expensive process.  

There are various types of costs involved in the Australian property investment such as;  

Home Loan Costs for Australian Real Estate  

Home Loan Costs for australian real estate

Unless you have enough cash to make such a big purchase, you would need a home loan to make a final move.  

Most home loans come with fees and mostly all of them will charge interest after all loan is not charity. 

Other home loan fees involved are as follows; 

  • Ongoing fees. 
  • Lenders mortgage insurance. 
  • Loan establishment fees. 
  • Interest payments. 
  • Break costs. 

We will briefly explain these costs below: 

Lenders Mortgage Insurance (LMI) 

Lenders Mortgage Insurance

It is an insurance policy which covers lenders against losses in the event that the borrower can no longer meet their loan repayments and defaulting.    

You can avoid paying LMI if you have a deposit of about 20% of the property’s value or if you have greater, or if you use a guarantor. But if you have to pay, it can also cost you thousands of dollars. 

Loan Establishment Fees 

Loan Establishment Fees

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 will charge this fee, but those who do will often charge around $250 and the maximum can be as high as $800-$1,000. You must stay aware!  

You can also be charged a valuation fee but many 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 loan.  

Ongoing Loan Fees 

Just like an application fee, your home loan might also come with an ongoing fee. This fee is usually charged annually. Yet again, not all lenders will charge this fee but common costs can be around $100 to $180 per year. On the other hand, some can even charge up to $400. 

Interest Payments 

Although it is not a fee interest will generally be the biggest cost of a home loan. A low-interest rate on your property investment will save you tens of thousands of dollars. Investment home loans usually carry higher interest rates on average than an owner-occupier loan, which also means a higher interest cost.  

Home Loan Break Costs 

Home Loan Break Costs

This cost applies only to fixed home loans. Also, these occur when you leave the loan before the fixed-rate term is up. These fees often cost people a couple of thousand dollars. Some experts may even quote examples of $30,000+ fees. So, you must think hard about whether a fixed-rate loan is a good option for you or not.  

Your lender might even charge an early exit fee in case you fully pay off your mortgage earlier than the mentioned home loan term.  

Also, discharge fees may apply once the loan is completed. All or none of the costs may apply for any home loan. So, make sure you check all the terms and conditions. Also, see what fees a real estate agent is charging.   

Property Buying Costs 

While the above-mentioned fees apply to the home loan, there are some other costs too which must be considered while making an investment in Australian Real Estate. The fees are as follows:  

  • The deposit 
  • Conveyancing and solicitor fees 
  • Stamp duty 

Property Owning Costs 

Apart from the above, there are more important investment fees like: 

  • Land tax 
  • Land and home insurance 
  • Council rates 
  • Property manager fees 
  • Body corporate fees 
  • Repair and maintenance fees 
  • Advertising fees (for tenants) 
  • Depreciation 

Landlord Insurance  

This policy is to protect the interest of the owners of the investment property i.e., the landlords. Landlord’s insurance works in coordination with content and home insurance. This insurance also has coverage to protect against loss or any damage that might arise from tenancy issues like loss of rental income, damage to the property and theft.  

Council Rates 

These rates are also known as government rates. The council rates are annual or quarterly fees collected by the local governments. The fee is collected to maintain the council area, provide basic necessities such as bin collection services, plumbing, electricity and so on.  

This cost also varies from state to state. It is usually indexed against the property’s value. To know more about the council rates, you can contact the local state government.  

Land Tax 

Land Tax

This is another cost that you have to pay in order to buy a property in Australia. Land tax is an annual cost levied on the owners of the land and not on the property. Land tax is levied by the state governments. So, the cost can vary depending on the value of the land.   

Body Corporate Fees 

This cost is charged quarterly. The body corporate fees are also known as strata fees. These are rates charged on apartments, townhouses and the units. This fee covers the maintenance of the shared areas of the properties like balconies, lifts, gardens and the management of the block.  

You must know about this cost before you jump into making a big investment.  

Property Manager’s Fees 

Property Manager Fees

This is essential because owning an investment property in Australia means you will be likely to employ a property manager to manage your property. For that, you will pay the property manager and you will have to prepare the budget accordingly.  

Having a good property manager by your side means everything from collecting rent, maintaining property and finding tenants is carried out by the professional.  

Depending on your state and the property manager you choose, a property manager can cost around 5-12% of the weekly rental income.  

Repairs and Maintenance 

Repairs and Maintenance home

As a landlord it is your responsibility to ensure that the property is in good and livable condition for your tenants. It means, if something breaks or anything serious happens, you will have to get it fixed unless it is covered by insurance.   

There is no set cost for repairs and maintenance because it will depend entirely on the situation. But it is advised to keep a yearly budget aside. In case any untoward incident happens, you will already have a set budget for the same.  


There are a lot of elements that will lose their value with time like carpets, curtains, air-conditioners, appliances and furniture. So, you should factor this as well in the budget.  

Advertising for Tenants 

This might be the final cost you will have to factor in while investing in Australian real estate. You will advertise when you want tenants to live in. To find a tenant, you will have to advertise extensively or you can also reach out to the property agent.   

Doing a little research or hiring a good real estate agent in Hampton Park or the nearby suburbs will always be of great help to you. A good real estate agent like Manny Singh will guide you throughout the journey. So, whether it is to know about different costs involved in Australian Real Estate or anything else, do not hesitate to contact us. We are here to meet all your real estate needs. Call now. 

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