Is investing in property even worth it?

If the truth be told, I would be a little hesitant if I was starting out as a property investor today.

The costs and considerations that come with compliance alone are almost enough to make you want to throw in the towel before you even begin.

It’s much more expensive than it was when I started out, around 30 years ago.

Nowadays, when buying or renting out a property, there are a number of extra costs and obligations you need to take into consideration.

In most investments, the rent generally covers the mortgage. This is a broad generalisation, but by and large, the mortgage interest will be your biggest expense, and in the current market – even factoring in COVID-19 related deductions – the rent usually covers the mortgage.

There are other expenses you’ll need to cover out of your own pocket though.

These include: landlords insurance, property management fees, council rates, water rates, building and contents insurance (contents covers things like carpets and blinds), and ongoing repairs and maintenance.

If the property is an apartment or unit, you’ll pay strata fees, too.

On top of this, you may need to pay for:

  • Safety switch compliance – to ensure the electrical safety switch is current and working. It can cost around $300 to replace the safety switch if faulty.
  • Swimming pool registration and compliance checks or certification; bringing with it an annual registration fee of around $80 plus one-off fee each 4 years of around $350.
  • Smoke alarm compliance is something you can do yourself, but if your property is interstate, you’ll need to pay a company an annual fee of around $100 to service it on your behalf every 12 months. There are strict guidelines on what your obligations are as a landlord when it comes to smoke alarms, so be sure to know your obligations if choosing to look after your own smoke alarms.
  • Gas appliance compliance – to ensure the gas appliances are working and safe for tenant use.

All of the above can amount to a really significant sum.

So is it even worth all the stress, time and effort?

It can seem like a mug’s game.

Until, I’m reminded why property works!

We purchased our first investment some 30 years ago in Morwell for $21,000, that’s right $21,000!

The property was a standard 3 bedroom, 1 bathroom home with a single garage. Yes it needed some work and we updated the home for approximately $10,000. We rented it out for a while then decided to sell the house after 3 years. We sold the house for $70,000, an increase in value of approximately 133%.

With a little more knowledge up our sleeves we purchased our next Morwell investment for $28,000. This home was also your average 3 bedroom, 1 bathroom home with no garage or carport. We spent approximately $15,000 updating the home and erecting a single garage.

In the last 3 decades, that house has increased in value and is now worth approximately $230,000, so it has grown in value by just over 430%. This property now offers us a gross rental yield of 6.3% and will contribute to our total income as retirees.   

We have since purchased 2 more investment properties with the same goal in mind, and that is financial security in retirement.  

How else can everyday Australians with little financial knowledge achieve profits and wealth like this, if not in real estate?

Remember, this article does not constitute financial or legal advice. Please consult your professional financial and legal advisors before making any decisions for yourself.


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This post was written by Mandy Peck