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Purchase Costs versus ownership Costs
When buying a property, investment or home, there are certain costs associated with the process. These are your ‘purchase costs’, such as inspectors (building and pest), to check the property out, legal costs for conveyancing, Government stamp duty and mortgage/bank costs if you are borrowing money. Once you have shelled out generally another 5% on what you paid, you move into the next round of costs which are ownership costs. As the name suggests these costs continue throughout your ownership of the property. Depending whether the property is residential or commercial, costs can include rates, insurance, water charges, electricity, land tax and maintenance.
Types of Maintenance Costs
The final cost mentioned (maintenance), is the one that can vary widely at a moment’s notice. There are two types of maintenance costs, the first type is classed as emergency maintenance. This can be due to unforeseen circumstances like an old hot water system giving up, plumbing blocking up, a stove or a dishwasher breaking down and requiring replacement. All of these things have the potential to be $1,000 plus each and if several of them happen at once it can obviously be very expensive. The second type of maintenance is planned or progressive, and as the name suggests these are items you can budget for and plan to do over time to maintain the property in good order.
Maintenance Costs = Property Improvements
Many owners see maintenance as just a cost rather than looking at it more strategically, providing a chance to improve the property on an ongoing basis with a plan and a budget. Far too often do we see people buy a property anywhere from fair to excellent condition, only to do reactive maintenance and have the property slip back too poor to average condition respectively. If this is over a period of 10 years and the owner then wants to sell, they are going to need to spend a lot of money to improve the property and make it appealing to the market to achieve the price they want.
Don’t fall into this trap as with any asset look after it whether it be the house you live in or your investment property, take care of it throughout your ownership so that it is always ready to be put back onto the market.
To discuss your current property/properties or one you wish to purchase in the future please do not hesitate to contact us via phone or email.
