Standard Investment Property Expenses

Posted by on Mar 15, 2016 in Blog - Commercial Investment Properties | 0 comments

Standard Investment Property Expenses

There’s a particularly bad word that comes up when talking about property investing – overhead. Yes, overhead serves as that annoying little middle man that has a tendency to soak up profit margins and makes earning a passive income an aggressive ordeal. The best way to deal with unexpected expenses…is to expect them. Here are a few of the factors that are so far just an accepted fact of owning an investment property:

  Repairs

Commercial Property Repairs, Investment PropertyYou can look at repairs like an HVAC replacement in one of two ways, 1) either a huge chunk of overhead that destroys your positive cash flow or 2) a point to sell new tenants on in the future and thus raise rent prices. Repairs aren’t fun but they should be an expected expense of owning rental property, mostly because you want to keep the building looking pristine and extend its lifespan for as long as possible.

Property Manager Fees

The true premise of earning a passive income is walking to the mailbox and having checks billow out the door just like those late-night ‘own a yacht tomorrow’ infomercials proclaim. The only way to do this with investment property is to hire quality property managers who run the day to day operations such as finding tenants, paying taxes, cleaning and maintaining the building, etc. The more services they provide – the more they’ll cost you.

Taxes, Insurance, Fees

Unfortunately buying a property isn’t a ‘one and done’ expense. Instead there a.re annual fees due such as city taxes and monthly payments such as utilities, insurance, and possibly property owners association costs. Remember that you’re not only paying the property manager to pay these bills, you have to also come up with the money to do so.

Of course we’re not trying to scare you off from investing in property, it’s just that sometimes first-time property investors really believe they can own a yacht tomorrow. Your property can and will turn into a very lucrative cash cow but it involves finding a building in good shape at a great price and filling it with quality tenants.

 

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