Property Investment Costs 

We have produced a 5-part video series outlining all the costs of purchasing and then owning a brand new residential house and land investment property. Below is Part 1, outlining the assumptions for the video series. A link to the transcript of each video is below the video if you wish to read along or not play the video and read the content.

Part 2 - The costs of purchasing an investment property

Part 3 - The on-going costs of owning an investment property

Part 4 - How Negative Gearing works

Part 5 - The future benefits of owning an investment property

Click the image below to play the video of Part 1 or read the transcript below.

(If the video stops and starts regularly due to a slow Internet connection, click the Pause button for 15-20 seconds to allow the video to download in the background.)

              Right mouse click here to download a transcript of the video

Right Mouse click here to download a Cash Flow Analysis for a sample property.

Click Here For Part 2

(You can read a transcript of the video below)

Welcome to this first part of a 5 part series outlining the costs of purchasing and then owning an investment property.

In this first part we will outline the underlying assumptions that underpin the calculations on the spreadsheet of costs laid out before you. This spreadsheet is derived from the commercially available Property Investment Analysis Software, one of the most highly respected tools available to property investors, that calculates outcomes today and into the future from any given personal circumstances. We use this software to ascertain the precise costs you will incur based on your personal financial circumstances if you decide to purchase a property through OzInvest.

The purchase price in this example is the price of purchasing a brand new 4 bedroom, 2 bathroom, double garage home of around 200 square metres in size overall. Built on a standard building block of around 500 square metres and situated in an Estate of new homes, the property will be located close to all major facilities like schools, shops, public transport and health care.

We are assuming in this case that you are borrowing the full purchase price plus purchasing costs utilising the equity you have in an existing property as your deposit. The purchasing costs will be detailed later.

We are assuming a capital growth rate of this percentage compounding each year, and when you consider that all major capital cities have experienced actual capital growth rates on average in excess of 8% per annum over the last 30 years, this is a conservative growth rate.

We are assuming an underlying inflation rate of this percentage, even though Australia’s current inflation rate is much less, again to be conservative.

We are assuming you will receive this weekly rental income, and due to the Leaseback Program, there is no requirement to provide a rental vacancy factor in the calculations. We thoroughly research the current market rental amount in every Estate we market, as the Leaseback Program uses this recommended rental value as the minimum you will receive if for some reason a tenant is not found in the first 30 days after the building construction is completed.

We are assuming a loan interest rate on an interest only loan of this interest rate on a three year loan term.

We are assuming your marginal tax rate is this including the Medicare Levy. This is the marginal tax rate for all average income earners in Australia. We will demonstrate later the effect of a higher marginal tax rate if you earn more than the average weekly income.

We suggest you verify what your personal tax circumstances may be with your own tax advisor.

That concludes Part 1, and Part 2 is available to you now. Click the link below for Part 2.

Click Here For Part 2

Click here if you wish to speak to one of our licensed Investment Property Consultants.