Investment Properties Info - Securing Your Future
Home New Info Insider Tips Resources Guide
Invest In Real Estate
The Property The Loan The Financing Research Where to Buy The Analysis Your Credit Negotiating Foreclosures
Related Articles

Taking Out Equity

How to Invest in a Changing Market

Three Ways to Survive a Downturn

Estimate Properties Current Market Value

Reverse Mortgages

 

 

Operating Expenses for Investment Properties

Is the owner claiming their own time and work on the property as part of the operating expenses? If you will be doing this work, accounting, repairs, management, advertising, what will it cost you? Sometimes this is not listed as part of the cost of ownership when it should be.  Don't forget to factor this into the overall operating expenses.

Rates Go Up

Also, if you’re looking at expenses, you’ll need to pull these numbers from the past year, since taxes and insurance all go up. Sure, there might have been a paint job or new carpeting put in, and that would be a blip up just for that month, so it could even out, but overall, don’t take an average.  Rather look at current expenses and not an average total over a period of time.

Utility Rates

Utility rates, if the owner is paying for them, might be lower for a a few months, take into consideration the season and number of vacancies.  Again, averages are not exacting--best to look at current numbers and other factors that might be factors in the operating expenses.  As for expenses like electricity or heat, gauge the costs as if you were running the property at full capacity—that’s a true number.

But the best thing to do is have separate utility payments for each tenant in the building.

Management Duties

One person I know charges the tenant if the landscaping isn’t done. They’ll have a company come do it, but they bill the tenant—that was the arrangement or rental agreement when the tenant moved in.  This is often down for smaller buildings or when the owner lives out of town.

If the property manager lives in the building, his or her rent might be reduced and or he or she is paid, this a big expense for the owner.  On the other hand, you might not have to give such a reduction in rent going forward if you’re planning on taking over the management duties. Again, it’s how you fit into the puzzle and what solution or creative vision you can apply to the property.

Insurance

Insurance coverage is crucial if you’re a property owner. Weight what makes sense for you, everything from fire, flood, vandalism, rental interruption insurance, earthquake, and so on. The risk level you like to live under might be lower than the previous owner so all of these insurance fees will add up to more than the current owner’s rather risky lack of insurance.

Taxes

For taxes, look at comparables of like properties that have sold. Most times they are reassessed when a property is sold.

Privacy Policy | Terms & Conditions | Site Map | Contact Us | About Us | Partners | Advertising
© 2018 InvestmentPropertiesInfo.com. All rights reserved.