Investment property costs: upfront and ongoing expenses

Investment property costs - ultimate guide to upfront and ongoing expenses including LMI, capital gains, stamp duty and more.

Investment property costs: how much does it cost to invest in property?

Investment property costs: everything you need to know about upfront and ongoing expenses. There are various financial considerations involved with investing in property. This article provides an overview of the costs associated, including upfront expenses, ongoing commitments, and potential tax benefits. If you are investing in property without owning an existing property, you will need a deposit of at least 5% plus expenses like stamp duty and Lender’s Mortgage Insurance (LMI). Existing property owners can potentially leverage equity as a cost-effective way to invest although some other expenses are involved.

  • Upfront investment property costs include stamp duty, LMI, land tax, conveyancing, legal and planning fees, as well as building and pest inspections.
  • Ongoing expenses include capital gains tax, property management fees, insurance, council rates, strata fees, and maintenance and repair costs. Costs associated with owning an investment property are often tax deductible. It is important to keep records and consult accountants to maximize tax benefits. Investing in property? Talk to a UNO broker today

How much deposit do I need to invest in property?

When considering how much deposit you need for an investment property, there are generally two routes. You can either take out a new loan or use the equity in your current home. If you are taking out a loan, you will need at least a 5% deposit depending on your lender. But using equity in your home means you won’t need to pay any upfront costs to buy a second property. Both can be achievable depending on your needs and circumstances, but it is important to conduct research before making any financial decision. A UNO Broker can compare over 20 lenders to help find you the best deal.

Costs of investing in property for the first time

First-time property investors will generally need a deposit of at least 5% alongside funds to cover additional costs such as stamp duty and Lender’s Mortgage Insurance (LMI). The deposit required varies by lender, but a UNO Broker can help you find the best deal. For example, Bob wants to invest in an apartment worth $400,000. As this is Bob’s first investment, he has approached a UNO Broker who helped find an appropriate lender requiring a 5% deposit. Bob needs at least $37,000 to cover this investment - including a $20,000 deposit and around $16,000 in stamp duty. This gives a good idea of upfront investment property costs, but it is important to consider ongoing investment property expenses.

Costs of using existing equity to invest in property

It is easier to climb the property ladder once you are already on it. For those with existing properties, it is common to unlock funds for an investment property deposit with equity. Using existing equity can help avoid LMI on your investment property. However, there could still be some smaller costs such as application fees involved.

Upfront investment property costs

Stamp duty

Stamp duty is a state/territory government tax on documents and certain transactions. Commonly applicable to the purchases of homes, cars and other vehicles, stamp duty varies by state and can also be known as transfer duty or general duty. The stamp duty on an investment property can be quite substantial. For instance, you could pay $22,000 on a $600,000 investment property in New South Wales, according to UNO’s stamp duty calculator. Use UNO’s stamp duty calculator to estimate your stamp duty.

Lender’s Mortgage Insurance (LMI)

Lender’s Mortgage Insurance (LMI) is an upfront charge you pay when borrowing over 80% of a property’s purchase price. It is insurance paid by the borrower which covers the lender should anything bad happen. LMI varies based on factors including your lender, deposit and loan-to-value ratio (LVR). It is usually paid before settlement, but there are flexible options such as adding it to your mortgage or a different short-term loan. Read more: Lender’s mortgage insurance basicsYou won’t need to pay lMI if you are using equity in an existing property.

Land tax

Land tax is a state/territory tax based on the value of land you own, including vacant land, above a certain threshold. Unlike stamp duty, land tax is payable every year and levied based on your land’s value. The rates and rules for land tax vary by each state and territory. You don’t need to pay land tax on your principal place of residence.

Conveyancing, legal and planning fees

Any investment comes with a degree of risk and responsibility, so it is important to work with professionals who can help you navigate otherwise complicated processes. Conveyancers are experts familiar with property law who ensure property titles are properly transferred and settled between parties. Advising on any legal issues on the way, conveyancers also help transfer funds between parties when a settlement happens. Prices vary, but you can expect to pay anywhere from $500 to $2,000 for conveyancing. Although not a requirement, seeing a financial planner about your investment could be worthwhile. This is a professional who can advise on your financial decision. Financial planners can be paid via commission, ongoing rates or once-off/hourly fees.

Building and pest inspections

Building and pest inspections can save headaches later when it comes to investment properties. A building inspector executes construction inspections to determine whether there are any issues with the bones of your property. They typically charge between $400 and $800. In some states, there is no minimum qualification to be a building inspector. Make sure you choose a reputable company or inspector who demonstrates experience in their field. No one wants a new property with white ants. A pest inspector can check for all sorts of pests, giving you and your tenants peace of mind. Inspections can cost $200-500 depending on the size of your property.

The ongoing costs of property investment

Capital gains tax

If you make a profit (or capital gain) on your investment property, you will need to pay capital gains tax. For example, if you buy a property for $500,000 and sell it for $1 million later, you will have made a capital gain of $500,000. This gain must be declared on your tax return and you will need to pay a percentage in tax based on your individual income. If you hold an asset for longer than 12 months, there is a 50% capital gains discount. So, following the example above, you would declare a capital gain of $250,000. Read more: How to reduce or avoid capital gains tax on your property.

Property management

Investment properties are big and costly decisions; a property manager can help look after your investment by finding suitable tenants. Property managers market your rental property, collect rent, deal with bond payments and administration, and perform many other tasks to help make renting your investment easier. Property managers typically charge 7-10% of rental income which can be tax deductible.


It is important to protect your investment with insurance. There are a range of insurance products for landlords including building, contents, liability, and even dedicated landlord insurance which combine multiple policies. Costs vary depending on your property's location, value, and the insurer so it can help to shop around. If you have an existing insurance policy, you could try asking for a better deal.

Council rates and strata fees

Council rates are a tax charged by your local government that help pay for essential services and maintenance in your area. They can typically be paid in full annually or quarterly. Rates vary by council. As a rough idea, they average around $1050 annually in NSW or $1612 a year in SA. If you own an apartment, strata fees are charged to help with building and facilities maintenance. These funds are paid by all apartment owners into a corporate body that administers them as required. Fees are typically 0.5-1.2% of your property’s value or $15-35 a week, according to Strata Data.

Maintenance and repair costs

Property maintenance costs might include cleaning, general maintenance or repairs should a hot water system or something else break. These expenses can often happen suddenly so it is important to plan for them by having an emergency fund for your investment property if possible.

How tax deductions can help with the costs of investing in property

There are many tax benefits for landlords. Many expenses associated with owning or maintaining an investment are tax deductible in Australia. For landlords, this means insurance, property marketing costs, property management, property repairs, and much more are tax deductible. It is important to keep receipts for property-related expenses and work with an accountant who can advise on property tax deductions. Read more

Book Call Now

Book Call Now

UNO home loans

Need help with your home loan?

UNO Brokers are available night and day for a quick review or your situation and bring expertise that will support better decision making that will save you time and money. Book in a quick call when it suits your busy schedule

Get Started

Related Articles


What our customers are saying

Rosie Deiath
July 2, 2024
Karis from UNO was so supportive throughout the entire process of buying our first home. She was contactable at any time, and answered all our silly questions for us. We couldn't recommend Karis and her team enough, as it always felt like she was in our corner with our best interests at heart.
Read more
Jack Mikkelsen
July 2, 2024
We dealt with Karis Churchill as the mortgage broker for our first home. Karis was so supportive and knowledgeable through the whole process! A+ mortgage broker. Definitely utilise her expertise if you’re buying a house!
Read more
Kapil Baldota
June 25, 2024
Eren Tan is absolutely one of the best mortgage brokers in Melbourne! Keeping us well informed throughout the process. Eren gave us a helpful hand in managing to get our loan over the line in a quick and efficient way which is what we wanted and he delivered on that. Thank you Eren Tan!
Read more
June 21, 2024
I only have praise from my Uno experience! I was a broker sceptic, having done all of the hard work myself for my first two property purchases and sale. I'm now a proud broker advocate having used UNO (Karis Churchill) for two refinances and purchase. The value add Karis brought cannot be underrated! Not only has Karis got me the best rate, with a bonus cash back (nearly unheard of in this climate), she has done it with the least back-a-forth and with the least administrative burden on me (the thing that can deters people from refinancing to begin with). Karis is always on top of everything. Karis knows her stuff. She is the most responsive of any professional service provider I've ever used (my banker never text with an update at 7pm on a Sunday) without being overbearing. You know she's got your back and in my experience the value speaks for itself. Thank you to the whole UNO team, thank you especially to Karis.
Read more
Leanda Cawdry
June 8, 2024
Very pleased with the outcome of this process, Michael Parsons and his team at UNO were helpful, communicative, and took all the stress out of the process of finding me a refinance deal that met my needs. Would definitely recommend Michael and UNO, and I already have!
Read more
Glen Matthews
May 29, 2024
Regarding UNO Home Loan services. I had great experience with uno home loans, Michael parsons was my broker for UNO Home Loans we had excellent communication throughout the whole home loan application. If I had any questions on home loan application which were many were answered in great detail. He had the time to assist me in filling out endless application forms at anytime through the day or night which made the application process stress free. So I would strongly recommend Michael parsons from UNO Home Loans to try his services you will not be disappointed. Thanks to Michael parsons I have the lowest home loan interest rate I could ever hope for which I particularly ask for. It’s was a pleasure working with him. And will be using his services in the near future.
Read more
Gillian Anderson
May 28, 2024
Thank you to Michael and UNO for their help in securing our home loan. I like the way they break everything down in simple terms to ensure that you can make the right decision. Michael was polite and very patient to help us get things across the line. We are now sitting in our first home away from rental circus. Can't recommend them enough. Thanks Michael and thanks UNO
Read more
Andy Song
May 17, 2024
Amy has been absolutely wonderful as a broker. I would not hesitate one bit in recommending her services.
Read more
Troy H
May 13, 2024
Scott Wilkinson did a great job as my broker. He was very patient and always happy to answer my numerous questions throughout the considerable period of time that it took to secure a suitable property. Would certainly recommend Scott and the team at UNO for anyone seeking a broker.
Read more
Elvin Singh
May 10, 2024
First time I have used a Broker and I must say Andrew Wyers and his team were amazing to work with and handled my refinance from a Big4 bank. He was able to understand my needs and find a lender that will be able to help me grow my investment portfolio. Andrew and his team kept me updated as part of my refinance journey and made the process super easy and I was able to refi to new lender in under 2 weeks. Would highly recommend Andrew.
Read more
Nadine Steffens
April 19, 2024
Scott and the team at Uno are absolutely 💯 amazing. I don't think I could have done my loan on my own. They are highly motivated and I do recommend them.
Read more
April 16, 2024
Dealing with Scott Wilkinson was an absolute delight. Scott is tenacious, hard working and readily available. He made a very stressful process for me and my partner smooth sailing. Would highly recommend.
Read more