It's easy to budget for the mortgage and forget everything else. A realistic investor budget accounts for these regularly, not as an occasional surprise.
Ongoing running costs
Rates, insurance, and property management fees if you're not self-managing, are the predictable, recurring costs. Body corporate levies apply if you're buying a unit title property. These are all worth getting actual quotes for on a specific property, not just estimating.
Maintenance and repairs
Every property needs ongoing upkeep, and older properties need more. Rather than treating repairs as a surprise cost, build a maintenance reserve into your annual budget so a hot water cylinder failure doesn't derail your cash flow.
Vacancy
No property is tenanted 52 weeks of every year without exception. Between tenancies, and occasionally during them, there will be gaps. Budgeting for some vacancy is more realistic than assuming full occupancy forever.
Quick tip
Build a simple annual budget before you buy, not after — rates, insurance, management fees, a maintenance allowance and a vacancy allowance, all set against realistic rent. If the numbers only work in a best-case scenario, that's worth knowing upfront.
Costs at purchase
LIM reports, building reports and legal fees all come before you've even settled. Factor these into your initial cash requirement alongside your deposit.
Taxation
Rental income is taxable, and the tax on your rental profit is a real, ongoing cost that's easy to overlook if you're only watching cash flow. If you sell within the applicable bright-line period, tax may also apply to any gain on sale. What you actually owe depends on your income, how the property is owned, and rules that change over time — this is an area where a general page like this can point you in the right direction, but not give you a number.
Accounting and compliance
Annual accounting fees, and any costs to bring a property up to Healthy Homes standard, are both genuine costs of doing business as a landlord — worth budgeting for rather than treating as one-offs.
Happy to talk through what a realistic budget looks like for a specific property you're considering.
This is general information only, not financial advice. Speak with your accountant for a budget specific to your situation.
