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Hidden Expenses Revealed: How Moving Costs Can Impact Your Property Investment

CM Law's Ultimate List: The top 50 FAQs on Buying a Residential Investment Property #45. Moving Costs

Introduction

When buying a residential investment property in Australia, it’s easy to focus on purchase prices, mortgage rates, and rental yields while overlooking the significant costs associated with moving. Whether you are buying a property for personal use or as an investment, moving expenses can quickly add up, affecting your cash flow and overall investment returns. In New South Wales (NSW), moving costs can vary widely depending on the distance, size of the property, and additional services required. This guide breaks down the various moving costs that investors should account for and provides strategies for minimizing their financial impact.

Key Moving Costs to Consider:

Removalist Services:

One of the largest expenses when moving is hiring professional removalists to transport your belongings. Removalist costs in NSW can range from $500 to $3,000, depending on factors such as the size of the move, distance between properties, and the level of service required (e.g., packing and unpacking services).

For investors purchasing properties to rent out, the costs of moving furniture and appliances into the property may be necessary. This is particularly relevant for those planning to rent furnished units. Investors should obtain quotes from several removalist companies and budget for these costs to avoid unexpected financial strain.

Utility Connection and Disconnection Fees:

Moving to a new property often involves connecting utilities such as electricity, gas, water, and internet. In NSW, utility providers typically charge connection and disconnection fees, which can vary depending on the service provider and location of the property. On average, connection fees range from $60 to $150 per utility, while disconnection fees may apply when leaving your previous residence.

Investors should also be aware that properties in rural or remote areas may face higher connection costs, especially if infrastructure needs to be extended. These costs should be factored into the overall moving budget to avoid delays in getting the property ready for rental.

Storage Costs:

If there’s a gap between moving out of one property and into another, investors may need to store furniture and belongings temporarily. Storage units in NSW typically range from $150 to $500 per month, depending on the size of the unit and location. Long-term storage can add up quickly, so it’s essential to factor in these costs if the move is delayed or if renovations are required before the new property is ready for occupancy.

Cleaning and Repairs:

Before moving into a new investment property or preparing a previous property for sale or lease, investors often incur costs for cleaning and minor repairs. Professional cleaning services for a standard three-bedroom home in NSW range from $200 to $500, while more extensive cleaning or repairs, such as painting, carpet cleaning, or fixing damage, can cost significantly more.

Landlords should also consider the cost of end-of-lease cleaning if the property is being vacated by tenants. In many cases, bond disputes arise over cleaning, so it’s important to ensure the property is returned in good condition to avoid losing rental income.

Temporary Accommodation:

If there’s a delay in the settlement process or if renovations are required before moving into the new property, investors may need to arrange temporary accommodation. In NSW, short-term accommodation can cost anywhere from $100 to $300 per night, depending on the location and type of accommodation. For investors, these costs can quickly erode profit margins, especially if the delay is prolonged.

Planning for potential delays and having contingency funds set aside can help mitigate the impact of temporary accommodation expenses.

Behaviour of the Participants:

Moving costs often catch investors by surprise, leading to stress and financial strain. One Sydney-based investor, eager to move into their new investment property quickly, underestimated the costs of removalist services and utility connections. Faced with a much higher bill than anticipated, the investor had to delay other planned upgrades to the property.

In contrast, another investor in Newcastle found themselves in a desperate situation when they encountered a three-month delay in the settlement process. Forced to rent temporary accommodation while waiting for the property to become available, the investor saw their moving costs skyrocket, severely impacting their cash flow.

Legal Process and Court Involvement:

While moving costs themselves are not typically the subject of legal disputes, delays in settlement or issues with the condition of the property can lead to legal action. In the case of Brown v Carrington Properties [2019] NSWLEC 1058, the buyer sued the seller after discovering that the property had significant undisclosed damage, delaying the move. The buyer had to arrange temporary accommodation and incurred additional moving costs, which they sought to recover from the seller.

The court ruled in favor of the buyer, awarding compensation for the unexpected costs, including moving and accommodation expenses. This case underscores the importance of ensuring that the property is in the condition described at the time of sale, and it highlights how moving costs can escalate when unforeseen delays occur.

Financial Consequences:

In the Brown v Carrington Properties case, the buyer faced moving costs that exceeded $15,000 due to the need for temporary accommodation, additional removalist services, and storage. The seller was ordered to compensate the buyer for these expenses, along with legal fees. For investors, unexpected moving costs can erode profits and delay the ability to rent or resell the property.

For those managing multiple investment properties, even small moving-related expenses can add up quickly, affecting cash flow and profitability. Investors should carefully budget for all potential moving costs to avoid financial strain.

Considerations for Investors:

  1. Get Multiple Removalist Quotes: To avoid overspending on removalist services, obtain quotes from several companies and consider factors like insurance and service level.

  2. Plan for Utility Connection Fees: Ensure you budget for utility connection and disconnection fees, especially in remote or rural areas where costs may be higher.

  3. Factor in Temporary Storage: If the move is delayed or if the property requires renovations, plan for the cost of storing furniture and belongings to avoid last-minute surprises.

  4. Prepare for Unexpected Delays: Investors should have a contingency fund in place to cover temporary accommodation, extended storage, or additional moving costs in case of settlement delays or unexpected repairs.

Statistics:

  1. Removalist Costs: In NSW, the average cost for removalist services ranges from $500 to $3,000, depending on the distance and size of the move (Source: NSW Removalist Services).

  2. Utility Connection Fees: Utility connection fees in NSW can range from $60 to $150 per service, with disconnection fees adding an additional $30-$70 (Source: Energy NSW).

  3. Storage Costs: Monthly storage fees in NSW range from $150 to $500, depending on the size of the storage unit and location (Source: Storage NSW).

  4. Cleaning Services: Professional cleaning services for a standard three-bedroom home in NSW cost between $200 and $500 (Source: NSW Cleaning Services).

  5. Temporary Accommodation Costs: The average nightly cost for temporary accommodation in NSW ranges from $100 to $300, depending on location and type (Source: CoreLogic).

  6. End-of-Lease Cleaning: Landlords in NSW spend an average of $200 to $600 on end-of-lease cleaning and repairs (Source: NSW Fair Trading).

  7. Settlement Delays: 8% of property transactions in NSW experience delays in settlement, leading to additional moving costs (Source: NSW Conveyancing Report).

  8. Bond Disputes: 15% of bond disputes in NSW rental properties involve cleaning or damage issues, which can lead to further moving expenses (Source: NSW Tenants Union).

  9. Utility Disconnections: 10% of movers in NSW report issues with delayed utility disconnections, leading to additional costs (Source: Energy NSW).

  10. Storage Usage: 20% of NSW property buyers use storage services during the moving process, typically for 1-3 months (Source: Storage NSW).

Essential Resources:

Government Resources:

Non-Profit Resources: