Unlike some other investments (such as shares and bank deposits), the entry, exit and holding costs for investment properties can be significant. It’s important to consider all the costs involved – not just the loan repayments.
In addition to the price you pay for an investment property – as with any property – you’ll have to pay stamp duty, settlement fees, insurance, and maybe even building and pest inspection fees.
Stamp duty is a state-based tax and the amount you’ll have to pay will depend on each state or territory’s individual model, but typically the higher the cost of the property, the higher the stamp duty will be.
If you buy an investment property, you’ll have to wait for it to rise in value equivalent to the costs of buying it before you can break even. When determining your final profit margin, you’ll also have to take into account the costs of selling.