Owning an investment property in Australia involves a range of ongoing costs that must be accounted for in any cash flow analysis. Many investors underestimate these costs, which can significantly affect actual returns.
Mortgage repayments. The largest ongoing cost for most investors. Interest-only repayments are tax-deductible; principal repayments are not.
Property management fees. A property manager typically charges 7–10% of weekly rent plus a letting fee (equivalent to 1–2 weeks’ rent) when a new tenant is found. Property management is strongly recommended for investor-owned properties.
Council rates. Annual council rates vary by local government area but typically range from $1,000 to $3,000+ per year for residential investment properties.
Water rates. Varies by state. In many jurisdictions, the landlord pays fixed water charges and the tenant pays usage.
Landlord insurance. Landlord insurance covers loss of rent, tenant damage, liability, and building damage. Annual premiums typically range from $1,200 to $2,500 depending on the property and location.
Repairs and maintenance. A prudent allowance is 0.5–1% of property value per annum. Properties require ongoing maintenance to attract and retain quality tenants.
Land tax. Applies once a portfolio’s land value exceeds the state threshold.
Strata/body corporate levies (units and townhouses). Vary widely — from $1,000 to $10,000+ per year depending on the building and its amenities.
Depreciation. Not a cash cost — a non-cash tax deduction — but should be factored into tax modelling.
