Skip to content When I bought my first Sydney investment property more than 7 years ago, I thought I was setting myself up for a solid long term investment. It was a one bedroom unit with a car space, bought for $620,500 in a suburb close to Sydney Airport. The location was convenient, it had a city view, close to shops and the rental demand was strong. What could go wrong, surely it is a winner right?
Looking back now after selling, I’ve run the numbers properly. I didn’t lose money but the opportunity cost was massive. However, I am still grateful and lucky that I was able to turn a positive return. Here’s a full breakdown of the experience.
Upfront and Ongoing Costs
Buying a property in Australia involves high upfront costs and is heavier than I expected. For this apartment, I paid around $149,500 upfront (20% deposit , solicitor, stamp duty, and government charges). That is around $25,000 in costs other than the initial deposit!
The running costs added up over time too. Council rates, water, strata fees, property management fees and strata were manageable at the start, but from 2019 onwards strata rose quickly. At first, running costs took up about 26% of the rental income, but later this jumped to over 40% mainly due to high strata fees and some big special levy.
Rental Income and Mortgage Management
The good part was the rental side. The apartment was super easy to rent out as the location is super convenient and I never had a long vacancy period. Rent was relatively stable (except during COVID) but that eventually returned back to normal in 2024. One key reason for being able to come out with a small profit is definitely mortgage management. During COVID where rates dropped significantly, I saw the opportunity to lock in the low rate for 3 years which turned out to be the best decision! I managed to benefit from higher rental income before the fixed rate expired and repayments increased.
Selling the Property
After more than 7 years, I decided to sell. The main reasons were:
High strata fees were cutting into returns
No real capital growth in this investment
I wanted to free up funds for other investments with potentially higher returns (opportunity cost)
The final sale price was $700,000. After agent fees of $10,000 and other fees (solicitor, discharge, advertising etc) of $4,200, I walked away with a gain of ~$40,000 on paper. BUT! That is actually not the right number, let’s dig into it further.
Net Income and Return on Equity (ROE)
Over 7 years, the rental income minus mortgage costs and running expenses added to around $13,000 in surplus income.
So the total outcome was:
Capital gain: ~$40,000
Net rental income: ~$13,000
Total net return: ~$53,000
On my upfront cost of $149,500, that works out to a 35.5% ROE over 7 years or about 4.9% annualised. I guess I did beat chucking the money in a saving account…
The ATO and Capital Gains Tax (CGT)
Of course, no investment story is complete without the ATO taking its share. A rough calculation of the capital gains tax (CGT):
Cost base: Purchase price + initial costs + selling costs – depreciation
= $620,500 + $25,500 + $14,200 – $47,000 = $613,200Sale price: $700,000
Capital gain: $86,800
50% CGT discount (held >12 months): $43,400
Yes, the ATO is actually the final winner out of this transaction. The $43,400 will have to go onto my tax return for FY26 sadly…
Lessons Learned
Would I buy a Sydney apartment again as an investment? Honestly no… The numbers don’t stack up when you factor in strata fees, potential special levies and limited capital growth compared to houses. For an owner occupier, maybe it makes sense if you value the lifestyle and convenience. But for an investment, I wouldn’t do it again.
That said I can’t complain as I got out with a small profit and that was mainly due to timing the mortgage cycle well. This investment was definitely a useful learning experience!
