Private property issue #63 - How much does it cost to invest in property?

How much does it cost to invest in property?

How much does it cost to invest in property? There are 3 main costs that you need to think about.

Even though our service at Opes is free, working with us to build a property portfolio still costs money.

Here are the costs you need to know:

How much money do I need to be a property investor?

There are 3 main costs of property investment:

Let’s go through them in more detail …

#1 Property price

Generally, a good new build investment property starts from $550,000 and can go up to $1.1 million.

Anything above that mark and the rental income doesn’t make much sense.

But a property’s price will change based on:

• Where it is
• The type of property it is

Here are some broad ranges of how much a new build investment property costs in 2023:

In the above table, we said that property prices start at $550k. But that doesn’t mean a $550k property will be available every day of the week.

Some property types get snapped up faster than others.

#2 Set up costs

It also costs money to buy a property and set it up. These are the hidden costs of buying a property.

You’ll need to pay for lawyers, a building inspection and maybe an accountant. Here are the main costs you’ll face:

Though these can change based on a range of factors. Watch this video on the 6 hidden costs of buying a property to get a full rundown on the set-up costs.

“I thought Opes was $0. Why are there $6.5k for financial advice fees in your table?”

Some property investment companies don’t charge you money to work with them.

That’s us here at Opes and some others in the industry too.

You might think, “How do you manage that?” We get paid by the developer.

If you buy a house that a property investment company recommends, they get paid a fee.

But, on top of this, some companies also charge you a fee. That's on top of the commission they get from the developer.

This is usually between $500 – $6,500 per property.

Of course, you don’t have to use a property investment company to invest in property. But if you do, the cost can range from $0 – $6.5k.

#3 Cashflow

If you buy a property today, interest rates are high. That's why a property's rent likely won't cover all the costs.

So you, as the property investor, have to cover the shortfall. We call this a 'top-up'.

If you borrow all the money to invest, your top-up will likely be between $350 and $500.

But your top-up will go down as interest rates fall (and the rent increases).

But that's if you borrow all the money to invest. If you have cash as a deposit, your top-up will be lower.

There are lots of factors that impact the cashflow of your property. That's why we've just released this cashflow calculator.

You can use it to get a sense of what the cashflow will be for your property.

Should I invest in property?

Even though working with Opes is free, investing in property still requires money.

By knowing these costs, you can decide whether to start (or grow) your investment portfolio.

Is it the right time for you to grow your portfolio? You might like to book a portfolio planning session with a financial adviser from Opes. Click the link below to book your free meeting.

👉 I want to plan my property portfolio with a financial adviser

Or, if you want to learn what happens at that session, click the link here.