The purchase price of an investment property is often the first number investors compare. But it’s rarely the one that determines long-term performance.
I often remind clients that the buying price matters – but what really determines success is what happens in the years following settlement.
What matters over time is the total cost to own the property, tenant demand and long-term rental stability, and the risks that may only become clear after settlement.
A lower purchase price can look appealing upfront, yet hidden expenses, ongoing maintenance, and unexpected vacancies can quickly shift the equation.
Looking beyond the headline price doesn’t mean over-complicating your decision. It simply means paying attention to the factors that most often influence cash flow, holding costs, and long-term outcomes.
Things property investors should consider beyond purchase price:
1) Ongoing costs can outweigh small differences in purchase price
Two similar properties can have very different ownership costs. Before you commit, it’s worth mapping the likely “non-negotiables” you will pay to hold the property.
This is where many investors accidentally overpay – not in the purchase price, but in estimated holding costs.
Common examples include:
- Strata levies and special levies (where applicable):
These can vary widely depending on building services, insurance history, and upcoming works. - Council rates and water charges:
These are usually predictable but still worth confirming. - Insurance:
Landlord insurance and building insurance (often arranged through strata) can vary based on claims history, location and building type. - Property management fees and letting fees:
These affect net yield, particularly in higher-turnover markets. - Routine maintenance:
Gardens, gutter cleaning, smoke alarm compliance, pest control and general repairs add up over time.
A slightly cheaper purchase can be more expensive to hold if levies, insurance or maintenance are higher than expected.
2) Condition and build quality often drive the “surprise costs”
A property can present well on inspection day and still come with near-term maintenance obligations.
Fresh paint and styling can hide potentially expensive future issues. Good due diligence helps protect buyers from unpleasant surprises later.
Items investors commonly underestimate:
- Roofing, waterproofing and drainage:
Leaks and water ingress are expensive and can be disruptive for tenants. - Electrical and plumbing condition:
Older switchboards, wiring and pipework can create compliance and repair issues. - Heating/cooling and hot water systems:
Age and efficiency matter for both tenant comfort and replacement timing. - External elements:
Decks, fences, retaining walls and balconies can require more upkeep than expected. - Pest and moisture risks:
Termites and damp issues can be costly if not identified early.
Where you have building and pest reports, read them for the “recommended further investigations” sections. Those lines are often where the real risks sit.
3) Strata and shared building decisions affect control and timing
For apartments and many townhouses, strata can be a benefit (shared maintenance and insurance) but it also changes your control over timing and costs.
Strata or Community records often tell the real story of a building – not just how it looks on inspection day.
Consider:
- Sinking fund adequacy:
Is the owners corporation budgeting realistically for major works? - Upcoming capital works:
Lifts, façade repairs, roof replacement, fire systems and waterproofing can be significant. - Building defects and cladding history:
The paper trail matters. - By-laws that impact leasing:
Some by-laws affect pets, short-stay use, renovations, or even how common areas can be used.
Your conveyancer or solicitor will typically review strata records as part of due diligence. If anything is unclear, ask them to explain the implications in plain English.
4) Tenant demand and vacancy risk aren’t just “suburb-level” issues
It’s common to look at a suburb vacancy rate and assume the property will be fine. In practice, demand can vary street-by-street and building-by-building.
Two properties or groups of units in the same suburb or even the same street can perform very differently depending on layout, parking, light and building reputation.
Useful checks include:
- Property type alignment:
Does the area prefer two-bedroom apartments, family homes, or something else? - Parking and storage:
In many markets, these can materially affect tenant demand. - Natural light, ventilation and noise:
These can influence how quickly a property leases and how long tenants stay. - Access and amenity:
Transport, schools, hospitals, major employment hubs and lifestyle infrastructure can all affect tenant depth. - Competing supply:
Nearby new developments or high rental stock can pressure rent and increase incentives.
A local property manager is often best placed to explain what tenants are currently choosing and what sits on the market longer.
5) Cash flow depends on timing, not just totals
Even where the annual numbers look similar, timing can change the ownership experience.
Many investment stress situations come from poor timing rather than poor property selection.
Examples:
- Settlement timing and initial vacancy:
A long settlement or a tenant moving out early can create a cash flow gap. - Seasonality:
Some areas lease quickly at certain times of year and slow at others. - Planned works:
If you need to complete repairs or upgrades, you may have a period with no rent. - Interest rate buffers and lending changes:
Lenders can reassess servicing, and fixed-rate roll-offs can affect repayments.
The goal is not to predict everything perfectly. It’s to make sure you have enough buffer and a plan for the most common “timing shocks”.
6) Understand what you’re buying from a tax and deductions perspective
Investors often focus on rent and capital growth expectations, but the structure and components of the property can also influence deductions available over time.
Professional advice here can materially improve long-term investment outcomes.
Two practical considerations:
- Repairs vs improvements:
The tax treatment can differ depending on whether work is considered a repair, replacement, or improvement. - Depreciation considerations:
Many income-producing properties may be eligible to claim depreciation deductions on certain building and asset components, depending on circumstances. A professionally prepared depreciation schedule helps your accountant apply the relevant rules accurately.
If depreciation is likely to be relevant, it’s usually easiest to organise the schedule early, while purchase documents and property details are readily available.
7) Documents to review before (and after) you buy
A simple checklist many investors find useful:
Before purchase (as available):
- Contract of sale and disclosure documents
- Building and pest report
- Strata report (if applicable)
- Recent comparable rentals and leasing feedback (from a property manager)
- Insurance considerations (including strata insurance details where relevant)
After purchase:
- Settlement statement and purchase documents
- Any renovation invoices and dates (keep these well organised)
- Appliance manuals / warranties (helpful for maintenance planning)
- A depreciation schedule (if appropriate for your situation)
Practical next steps
If you’re weighing up a property, consider asking your property manager (or a local manager in the area) to provide:
- an estimate of achievable rent in the current market
- likely tenant profile and demand drivers
- any “watch-outs” they see in comparable properties (parking, noise, layout, building reputation)
If you would like expert advice on the depreciation deductions available on your investment property, contact BMT Tax Depreciation on 1300 728 726 or Request a Quote.
If you’d like help assessing whether a property suits your long-term plans – either as a home or an investment, I’m always willing to have a conversation before decisions become stressful. Contact me on 08 7221 2800 or Request a meeting with Michael.