Just wondering if ppl could post the most obvious costs in buying/maintaining an ip! Have stated the obvious Interest fees Conveyancing fees Pest control fees Land tax Council rates Water rates Insurance Property manager fees Off the top of my head I came up with these trying to suss out the associated expenses in running a IP in comparison to having a share portfolio with less outgoings! Is the general consensus that fees and expenses account for around 30% of rental income? Obviously varies based on condition of the IP etc etc just looking around for a detailed list of running g expenses if anybody could be so kind as to share some insights! Ta.
Pretty detailed list..... all useless if your comparing IP to share portfolio. The only thing that makes property worthwhile is leverage.
This is what mine looks like: One off Let fee Ground Maintenance - Statement #1 New screen doors Electrical Services Pool pump repair Restored power Monthly Pool service Management fee Sundry fee Interest payment Insurance 3 monthly Water Rates 6 monthly Land Rates Looks like you have the ongoing nailed, make sure you account for One offs, there will always be little maintenance things to be done. For buying costs, you don't seem to have listed Stamp Duty. Also initially you will have some costs for Marketing and setup fee with the agent renting it out.
After all that, likely you'll lose money every day. Why wouldn't you just buy some shares and get positive dividends?
dont forget the hotwater system that always seems to go when you dont want it to. These come in around the $1300 mark
Tax benefits can make holding property easier, followed by rental increases which can improve the cash flow. Ability to improve the asset through renovation and development. Along with most peoples goal being capital growth. Put all of this together with the ability to leverage makes buying property pretty attractive. That was before, going forward...
Geared property will beat ungeared shares with even small (say, 4%) gains. OP, your comparing apples to oranges.
Every property/deal I have bought has lost money in the initial period. And yet we have been able to build a multimillion dollar net portfolio in a relatively quick period of time. It all comes back to a persons goals, financial situation is a big one, risk tolerance, skill level and strategy. It is definitely not black and white as buy positive to make money as opposed to buying negative and losing money. Though unfortunately many people who buy investment properties focus on the weekly positive balance (if it really is positive after repairs etc) and ignore many other important factors to take into consideration. I'm not against Positive CF properties at all. I'm just saying there are many other important factors to consider. In this most recent Sydney boom I know a few people who had amazing financial capacity and cash to buy fantastic deals in Sydney and chose regional inferior locations for the positive balance which really didn't amount to much. In the mean time they probably lost millions and millions in equity. Opportunity (of a lifetime perhaps) lost simply because they were misinformed/under informed. Education is key in this game. My 2 cents.
