Every Cost Australian Investors Should Model Before Buying

A PropMax checklist of holding costs, purchase costs, and worst-case buffers so you never underestimate an investment property.

Buying an investment property is not just about the purchase price and the expected rent. Australian investors face a long list of upfront, ongoing, and unexpected costs — and underestimating even a few of them can turn a promising investment into a cashflow drain.

This article breaks down every major cost you should model before you buy — and shows how PropMax.com.au helps you simulate the full financial picture, including cashflow stress-tests, worst-case buffers, and 30-year projections.

🧾 1. Purchase Costs (Upfront Costs Most Investors Forget)

These are the expenses payable at or before settlement. PropMax automatically adds these into your Year 0 calculations.

1.1 Stamp Duty

• Biggest upfront cost in most states.
• Varies depending on property value and state.
• PropMax automatically calculates it OR lets you override manually.

1.2 Conveyancing & Legal Fees

• Typically $1,000–$2,500.
• Includes contract review, searches, settlement management.

1.3 Building & Pest Inspection

• $300–$900 for existing houses.
• New builds/off-the-plan may not require (but still recommended).

1.4 Loan Establishment Fees & LMI

• Application fees: $200–$600.
• Lenders Mortgage Insurance (LMI) applies if borrowing >80%.
• PropMax models:
  • LMI capitalisation
  • Higher monthly repayments
  • Long-term impact on cashflow

1.5 Buyers’ Agent Fees

• Usually 1.5–2.5% of purchase price.
• PropMax includes them in holding cost analysis.

1.6 Adjustments at Settlement

• Council rates
• Water rates
• Owners corporation fees (if applicable)
• PropMax lets you input exact prorated amounts.

🔧 2. Renovation & Initial Setup Costs

Many investors underestimate these essential early-stage expenses.

2.1 Cosmetic Renovations

• Paint, flooring, lighting upgrades
• Often $5k–$25k depending on scope

2.2 Safety & Compliance

• Smoke alarms
• Electrical checks
• Gas safety checks
• Minimum standards (Vic)

2.3 Appliances & Fixtures

• Fridge, dishwasher, blinds, split-system, etc.

PropMax allows you to add a Year 0 Renovation Budget, fully amortised across your investment timeline.

📅 3. Recurring Holding Costs (The Real Cashflow Story)

These determine whether your property is positively geared, neutrally geared, or negatively geared.

PropMax models all of the following:

3.1 Mortgage Interest

• The largest ongoing expense.
• PropMax handles:
  • P&I vs Interest-Only modes
  • Variable rate changes
  • Rate-shock scenarios

3.2 Property Management Fees

• Typically 6–10% of rent.
• Plus leasing fees, inspection fees.

3.3 Council Rates

• Usually $1,500–$3,000 per year.

3.4 Water Service Charges

• $600–$1,000 annually (varies by state).

3.5 Landlord Insurance

• $350–$650 per year.

3.6 Owners Corporation Fees (If Townhouse or Apartment)

• Ranges from $1,000 to $6,000+ depending on amenities.

3.7 Repairs & Maintenance

• Formula: 0.5%–1% of property value per year
• PropMax uses your custom assumption to forecast 30 years ahead.

3.8 Land Tax

• Different thresholds per state.
• Critical for multi-property investors.
• PropMax includes:
  • VIC/NSW/QLD/WA/SA calculators
  • Individual vs Trust ownership

🧮 4. Income-Related Calculations That Affect Costs

Costs alone don’t tell the story — income offset matters too.

4.1 Rental Vacancy

• Typical buffer: 2–4 weeks per year.
• PropMax models vacancy rate as a percentage or fixed weeks.

4.2 Maintenance Downtime

• When repairs prevent renting.
• Useful in modelling aggressive renovation strategies.

4.3 Depreciation (Non-Cash Benefit)

• Building allowance
• Fixtures & fittings depreciation
• Low-value pool
• PropMax supports:
  • Full QS schedule inputs
  • Yearly diminishing value modelling

Depreciation reduces tax payable — effectively improving cashflow.

⚠️ 5. Worst-Case Buffers (The Costs That Kill Beginner Investors)

PropMax lets you stress-test all worst-case scenarios:

5.1 Interest Rate Shock

• Example: +1% or +2% rate increase.
• Instantly see:
  • New repayments
  • New cashflow
  • Danger zones

5.2 Extended Vacancy

• 8–12 weeks vacant?
• Model it in a click.

5.3 Unexpected Major Repairs

• Hot water system
• Roof repairs
• Electrical rewiring

5.4 Tenant Damage

• Bond may not cover everything.
• PropMax lets you enter one-off negative events per year.

5.5 Declining Rent Market

• Model −5% rental drop in specific years.

📊 6. Complete PropMax Checklist of Costs to Model

Upfront Costs

• Stamp duty
• LMI
• Conveyancing
• Pest & building inspection
• Loan fees
• BA fees
• Setup & compliance costs
• Renovations

Recurring Holding Costs

• Mortgage interest
• Property management
• Council rates
• Water service charges
• Landlord insurance
• Owners corporation fees
• Repairs & maintenance
• Land tax
• Bad debt provisioning

Income Buffers

• Vacancy
• Rent reduction
• Downtime during repairs

Risk Buffers

• Interest rate increases
• Emergency repairs
• Legal disputes
• Market downturn scenarios
• Tenancy issues

PropMax gives you the power to adjust each of these, watch the numbers recalculate instantly, and view the exact impact on monthly and annual cashflow.

🖥️ 7. How PropMax Makes This Easy (What You Can Do in Seconds)

✔ Model Year 0: Purchase & Setup Costs

Break down every upfront dollar before you buy.

✔ Model 30 Years of Holding Costs

Smart defaults + editable cost assumptions.

✔ See True Cashflow (Monthly & Annual)

No more guessing or relying on agent brochures.

✔ Run Scenario Comparisons

• Best case
• Realistic case
• Worst case

✔ Compare Equity Growth vs Cashflow Drain

Find out if the property really fits into your 3×650k or multi-property strategy.

✔ Detect Red Flags Early

If the property becomes cashflow-negative beyond your risk threshold, you’ll know before signing the contract.

🚀 Final Takeaway

A property is only as good as the numbers behind it.

Australian investors who model every cost — upfront, ongoing, and unexpected — make smarter decisions and avoid nasty financial surprises. PropMax gives you a complete, professional-grade framework to evaluate any deal with confidence.

Never underestimate a property again.
Model every cost. Stress test every scenario.
And invest like a pro with PropMax.com.au.