How do I Work Out the Repayments Involved in a Purchase?

[ledd]

Hello all,

I'm a first-time investor. I've just managed to save a deposit to buy a property and I'll be buying in Brisbane.

Does anyone know the best way to work out all the costs involved with servicing a loan and any additional costs? Factoring in property management fees, property insurance, body corporate and also be able to work out what kind of money I'll be receiving from the ATO at tax time, for example.

I know what I have to pay each month but I also know there are a lot more costs involved.

Would people recommend I see some kind of financial broker, a mortgage broker… Who is the best person to help? Any books that people would recommend? A software program?

I just want to be sure I have enough money (I’m certain I do but I just want to be 100% sure). I just need to be pointed in the right direction.

Thank you in advance for any responses.

Mark

 

[yo yo ma]

G'day Mark
Firstly congratulations for getting in there & giving it a go. It is a good idea to confirm your finance & this can be used as a bargaining point in the negotiation stage. There are plenty of good brokers using this forum. Do a search of the finance section & you will see lots of posts. I use Rolf L
http://www.somersoft.com/forums/member.php?u=9

To check your tax refund go to the ato calculator & enter your details on the calculator (and don't forget to add the medicare levy)
http://www.ato.gov.au/default.asp?menu=65
You should also get a good accountant to do your tax for you, if you haven't already got one. They usually pay for themselves with an investment property... If you need recommendations, maybe make a post in the accounting section.

If you have to pay land tax on the purchase, you can estimate it on this calculator from the Qld Office of State Revenue (OSR).
http://www.osr.qld.gov.au/calculators/land_tax_disclaimer.shtml

You can use any good calculator to work out your loan replayments. They also have the stamp duty calulators on them. I like this one from St George as it is easy to use
http://www.stgeorge.com.au/mortgage/home_loans/calculators/default.asp?orc=personal

Property management fees in Brisbane average around 8.25% (7.5% + GST). This is my estimate only though. You will get quite a variety, so you have to look at each company to see what they offer. Also include the letting fee & some charge a postage fee also. Price is not the only factor as you need to look at how often inspections are carried out & the policies for following up late payment of rent.

Strata fees are dependant on each building. Note that buildings with swimming pools, gyms or lifts will have higher strata fees due to maintenance on these. You should inspect the minutes of the strata meetings (there is a fee involved) to look at what is happenening with the building & see if there are any upcoming maintenance issues that may require a special levy.

Building insuance will be done through the strata but you should get your own contents insurance for internal fittings such as carpets, blinds, taps, oven etc. You may want to get landlords insurance through a company like Terri Scheer (Qld $255pa.) This covers you for contents, public liability (essential) & loss of rent. There are heaps of other companies & you can get a quote online.
http://www.somersoft.com/forums/showthread.php?t=30374

You should get a quantity surveyor to do a depreciation schedule. This does depend on the age of the building. This may cost around $500 but it will save you much more. There is some more info
http://www.depreciator.com.au

Check the local council site for how much the rates are... Have a buffer so you are comfortable if repairs are needed... Get a building & pest inspection done (make the contact subject to this condition)
Just my ideas only
Hope this helps
Steve

 

[Peter_Tersteeg]

Unfortunately there's no easy way to figure it out, other than looking at the circumstances of the property. Agents fees will depend on the location. Maintenance costs depend on any number of factors. Rates depend on the location. Body corp is another variable.

As a rule of thumb, most lenders estimate that 20% of the rental income will go towards these costs for most properties, but this can also vary greatly.

The only way to get an accurate figure of holding costs is to do your due diligence. Adding these costs to a program like PIA will then give you a good estimate of your total out of pocket expenses.

 

[ledd]

Thanks Steve and Peter for your responses.

This site is such a fantastic resource for a new investor such as myself. I'll chase up those suggestions. They help a lot!

Cheers,

Mark