7 Hidden Costs Associated with Investing and Owning Properties

Property ownership in Australia is a goal many aspire to. By 2015 there were 9 million dwellings, and this speaks to the desire to own property. But owning property is perceived to be a capital intensive and risky venture. Here are some of the hidden costs that can come with property ownership that you need to consider.

  1. Insurance

Your property is an asset, and in the spirit of protecting the asset, you will find the need for insurance. Several insurance packages may apply to you depending on what kind of property owner and investor you are.

  • Landlord’s Insurance

If you plan to rent out your property, you will find landlords insurance indispensable. If you plan on being a landlord expect and account for delinquent tenants. When those who rent your property vanish in the middleof the night without paying rent, it leaves you with a revenue gap in your pocket.

Rent default is a clause that seeks to compensate you in case a tenant defaults on their rent. You can also claim compensation in the event of an unexpected death of a tenant. If you rent out your property and the tenant obtains a hardship order, the rental default clause will compensate you.

Landlord insurance will vary from plan to plan, and it's the details you need to pay attention to. The cost of a policy might be a factor in determining which policy to go with. However, you must consider how well the plan will protect you.

When there is damage to your property, building insurance will compensate you for full or partial loss to it. Contents insurance is also essential for a landlord whether you are renting out a furnished space or not. In the case of the former, the policy will cover all that you own. With the latter, the policy covers only that which you own and not the tenant’s.

  • Home Owner’s Insurance

As a homeowner, you need to protect yourself from liability and also cover your valuables. Public liability cover is critical in case other people are injured while on your property. Such a scenario will open you up to a potential lawsuit and unless you are covered, you face potential financial ruin.

Contents insurance protects all the items that belong to you and aren’t considered a part of the structure like carpets for example.

  1. Property Management

Being a landlord is not an easy task as many people think. While the appeal of passive income is ideal, the work that goes into keeping up with the property is not anyone’s cup of coffee. Enter property management professionals.

If you don’t have the time or are not inclined to personally handle rent collection, hire a reputable entity such as Roseberry Raineandhorne Property management firm to do the collections for you. When the inevitable late payment, bounced cheque or non-payment occurs, you do not have to chase the tenant around for it. Property managers can also help you keep up with repair and maintenance issues if you do not want to be involved in that minutiae.

  1. Vacancies

Every landlord dreams of receiving a steady income from their property. But the harsh reality is that no property that is open to tenants remains fully let all the time. Whenever your property experiences vacancies, it means that you will haveto pay out-of-pocket for expenses until you find new tenants.

To shield yourself from always footing this bill, you will need to establish an emergency fund. For many would-be landlords, this is a hidden expense that most do not learn of until it’s too late.

  1. Inspections

When you want to invest in property, the cost of inspection falls both ways, and you need to anticipate it. As a buyer, you will need to conduct independent inspections to unearth any hidden issues with the property you need to buy.

Inspection of a property you want to buy will help you negotiate wisely. As a seller pre-listing inspections help you to gain credibility with prospects and know how to price the property accurately. You will have to foot this expense no matter what side of the transaction you're on.

  1. Landscaping

A surprising cost that many first time property owners encounter is the landscaping charge. Your property might have a lawn or other greenery that needs tending regularly. When you’re shopping for the property, this may not have seemed like too big of a deal, but when you have it, you will begin to realise how much of a regular charge it can be.

Outsourcing landscaping duties is an option for many, but it quickly adds up. You need to consider if you can keep up with this amount for your space to not fall into disrepair.

  1. Maintenance and Repair

As long as you own property, it will inevitably require some repair work and maintenance. For both landlords and homeowners, these costs are a crucial part of whether their investment will make financial sense or not.

It is advisable to invest adequately in repairs and maintenance to avoid incurring bigger loses down the line. Create a fund to take care of costs that are unplanned for and which might place a financial strain on you.

  1. Taxes and Fees

There are several taxes, and levies charged by the government when you buy property. Stamp duty applies to your property investment, and it will be charged as a fixed percentage or according to scale. As a landlord, you will need to pay tax on your rental income. Property taxes will be due from every property you own while the land tax will depend on the size of property you own and what you use it for.


Owning property in Australia is an aspiration today as it was decades ago. What you must understand is that there are more costs on top of the purchase price of any property you might have your eyes on. Consider these costs before making the purchase decision as they may add up and strain you financially.