Doing the numbers - thoroughly

[jaspn]

I'm trying to get a 'bottom line' on my potential IPs. I want to enter into my first purchase knowing exactly where my money is going when it comes to financially maintaining it.

So far I have:

Expenses

- Loan establishment fees
- Loan maintenance fees
- Interest repayments
- Principal repayments (if applicable)
- Strata Fees
- Sinking fund
- Council Fees
- Water Fees
- Property maintenance
- Landlord Insurance
- Property Management

Misc

- General Maintenance estimate
- Vacancy estimate
- Accountant/financial adviser

Have I missed anything out?

 

[MelbGal]

Depreciation report from quantity surveyor

 

[alexlee]

Since a lot of those costs can change (interest rates and repairs especially), it's impossible to be completely accurate. THINKING you're completely accurate actually increases the risk you get whacked by surprise expenses because you aren't expecting them.

Be conservative and keep a buffer instead.

 

[marks]

Since a lot of those costs can change (interest rates and repairs especially), it's impossible to be completely accurate. THINKING you're completely accurate actually increases the risk you get whacked by surprise expenses because you aren't expecting them.

Be conservative and keep a buffer instead.

Agree with this. I keep 3 months of expenses (interest, rates, etc) as buffer to cover large bills (eg. hot water needing changing last month) and for vacancy. It is "I can sleep at night" buffer.

Inflation. To the rent and to the expenses.
Also how strata & body corp fees like to rise more than inflation... And Unevenly.

You will learn more about these as time progresses with your properties. You have a great due diligence list though.

 

[jaspn]

Sound advice. 'Rough' figures with a buffer is the way to go.

 

[Paul@PFI]

Pre Purchase

I havent found too many people think of a quality pest and building inspection. Its worth every cent when they find a issue BEFORE you exchange.

Paul
www.pricefinancial.com.au

 

[jaspn]

Indeed they are. I forgot to add that to the list. I'll have to break it down to two columns: Start up costs and ongoing costs.

 

[banyan]

Costs

These are some others for consideration, but not categorised
Travel
Inspections
Pest chemical replacement
Annual Fire Alarm checks
Annual/b-annual Gas checks
Solicitor fees
Stamp duties
Land transfer fees
Title search fee
Mortgage reg fee
Council rates
Body corp
Insurance(s)
Agent advertising
Depreciation report ($700 ish ?)
etc

 

[jaspn]

These are some others for consideration, but not categorised
Travel
Inspections
Pest chemical replacement
Annual Fire Alarm checks
Annual/b-annual Gas checks
Solicitor fees
Stamp duties
Land transfer fees
Title search fee
Mortgage reg fee
Council rates
Body corp
Insurance(s)
Agent advertising
Depreciation report ($700 ish ?)
etc

Thank you. I think I'll put together an excel doc which contains a master list of a) up front costs and b) ongoing costs.

 

[zads]

Thanks everyone. Saving these because I was wondering on this, also.

 

[Burramys]

When going through this sort of exercise I put the figures in a spreadsheet. Against each item there's a percentage variation, which can show what can happen when things change. For example, one line may be, by cells:
Renovation, $15 000, 10%, $16 500
You can change the figures to suit the likely worst case scenario to see how bad things might be. This can be a bit frightening if all comes unstuck simultaneously. However, it's better to be prepared.