Things to consider when budgeting for buying an apartment
Buying property can be very expensive and for some people will involve large sums of unexpected fees. It’s important to avoid this as much as possible by educating yourself around what you’ve purchased, and the related ongoing costs involved.
1. Proposed fees
One of the most crucial points to consider when buying off-the-plan is the proposed fees. These cover the cost of electricity, insurance, maintenance and repairs. Aside from factoring this ongoing expense into your budget, it’s worthwhile comparing the fees to other similar properties.
2. Mortgage repayments
Investors and owner occupiers need to buy a property that will suit their budgetary requirements. For example, if they have a small disposable income, they could target properties with higher rental yields, as this will help cover the mortgage repayments. For people with larger disposable incomes, though, they don’t necessarily need to target properties with higher rental yields.
3. Maintenance costs
Don’t forget the costs to maintain your own apartment. Investors and owner occupiers should have some buffer funds set aside for annual maintenance costs, whether it be for a yearly gutter clean before winter, to repair or replace an ageing fence or for a fresh coat of paint.
4. Property management fees
The cost of utilising a property manager will vary from company to company, however they shouldn’t be chosen based purely on price. A cheaper property manager probably won’t provide a proactive service to optimise your assets. If you need assistance, the PICA Group can provide names of reputable property managers.
5. Strata management
Apartments and townhouses will often require investors and owner occupiers to pay fees for managing the common property. Strata managers are experts in their field and act as a relationship manager between all owners and common property. The money is used to maintain areas within the complex, such as lifts, pools and gardens, so the more features within the complex the higher the fees will typically be. Investors should consider these additional costs in their budgets when planning their next purchase.
For useful tips on all things apartment living, download a copy of PICA Group’s Essential Guide to Apartment Living in Victoria HERE.