The Cost of Buying Real Estate

If you have made the decision to purchase your very first home, there are a few costs you will need to prepare for. These expenses can have an impact on the budget that you set for buying a house, so it’s important you determine what they could be before you decide on a property.

There are a few costs you will need to prepare for when buying your first home

Preparing for the Costs Ahead

If you have made the decision to purchase your very first home, there are a few costs you will need to prepare for.

These expenses can have an impact on the budget that you set for buying a house, so it’s important you determine what they could be before you decide on a property.

Deposit

Most people know they need to save for the deposit. Deposits are usually at least 5 per cent of the home’s overall cost, depending on the type of loan you obtain.

To determine how much your deposit will be, consider:

  • The average home price of the area in which you wish to buy
  • The type of loan you wish to get
  • The amount you wish to borrow through your loan

Stamp Duty

Stamp duty is a charge that is applied to the sale of residential property by state governments. It is not a fixed cost across the country – it differs in various states.

Stamp duty is one of the biggest costs that you may face in your property purchase, so it’s important to figure out how much this will be before you buy a home.

The cost is usually calculated based on the price of the home you purchase but each state has its own system.

The rate often differs depending on several factors:

  • Whether you are purchasing vacant land or a brand new house
  • If you are a first home buyer
  • If you are using the home as your main place of residence.

For example, some states offer first home buyers a stamp duty concession which will make their first home purchase a lot easier.

Depending on your state, this concession could apply to the purchase of new homes only, while other states provide funding for existing dwellings too.

It can be complicated to work out stamp duty on your own as there are many rates that apply to different house prices. Consult an online calculator to help you determine the cost.

Other Expenses

There are a number of other costs that are associated with buying your property:

  • Establishment fees for your mortgage
  • Pre-inspection costs
  • Legal fees
  • A valuation of the home

While these are not all significant figures individually, they can add up to a sizeable figure. Be sure that you can pay for them as they arise.

Ongoing Costs

Ongoing costs can impact what type of property you choose to buy as well as its location.

Council rates are a form of property tax put in place by state governments across the country and can vary among states and even cities.

They are usually based on the property’s value, and the funds are used for local infrastructure and services such as roads, libraries and waste collection.

There will also be expenses for utilities (water, electricity and gas) throughout the time that you own your home. Sometimes there may even be set-up fees for these services when you move into the home.

If you are purchasing in a shared block you will probably need to pay body corporate fees to cover the cost of maintenance on common areas – so make sure you factor these costs in as well.

What Tenants Want

It’s no secret that having a property that’s attractive to tenants will make your life easier, and more profitable. But how can you maximise your chances of attracting the right applicants for your property? Having the right features as part of your property can potentially make or break a deal. Not only will extra features attract a higher rent, but they are more likely to reduce the amount of time your property is left vacant.

But how can you maximise your chances of attracting the right applicants for your property?

How Can You Attract the Right Applicants

It’s no secret that having a property that’s attractive to tenants will make your life easier, and more profitable. But how can you maximise your chances of attracting the right applicants for your property?

Having the right features as part of your property can potentially make or break a deal.

Not only will extra features attract a higher rent, but they are more likely to reduce the amount of time your property is left vacant.

Every week a property is sitting vacant – and this can occur even in periods of low vacancy rates – is almost two per cent of your yearly income that you won’t get back, and for this reason reducing vacancies is crucial for every investor.

It is important to make sure your property is at the top of its game. In a market where there might be 50 or 60 other similar properties available, it is not just about getting top dollar but also leasing your property faster than others.

So, how can you make sure that tenants are competing for your property?

Factors such as market availability, individual income limitations and even the time of year can have an impact.

You should always try to present your property well, price it to meet the market and employ the services of a property manager who can oversee the whole operation.

Choosing the most Attractive Property

Some things can be added to any home – appliances, new paint or flooring – but there are many desirable factors that can’t be changed.

This is why it’s vital for homebuyers to consider every aspect of potential properties from a tenant’s perspective.

The first and most obvious consideration is location. Being close to transport and retail centres will increase your rental value, as will a decent view.

Another factor to consider is possible neighbours. You may find it hard to keep tenants if there are rowdy neighbours in the area.

A quick Google search will tell you more than any agent will so make sure you check out the location before moving forward.

A major concern for many tenants especially in the cities is parking – nowadays tenants expect double car accommodation. At the very minimum make sure you look for a place that has off street parking for at least one car.

What to Avoid

Just as there are some things tenants will be willing to pay more for, there are also features that will detract from the value of your property.

A ‘dark’ property will always put tenants off, as will one that’s dirty or in poor condition.

Remember you will not be the one living in the property so dark or brightly coloured rooms are a big turn-off. Try and stay as natural as possible to appeal to the biggest market.

What I Can Change?

If you already have a property and are looking to attract more tenants, there are a few things you can do to improve your chances and lease quickly.

Two items to consider installing are air-conditioning and a dishwasher.

Quality blinds will also go a long way when tenants inspect your property, especially if your potential tenants are shift workers.

Finally a fresh coat of paint and some new fittings such as door handles and light switches can go a long way in having your property rented to good tenants quickly.