New To Real Estate Investing? Look Out For Expenses!

I’ve covered the topic of NOI (Net Operating Income) before and if you are new to real estate investing you may wish to go back and read those posts. But the key to knowing your NOI is knowing the actual expenses. Here are some obvious expenses to look out for;

  • insurance
  • property management
  • leasing costs
  • grounds upkeep (lawn, snow removal)
  • maintenance costs
  • vacancy

Here are some expenses you may not readily think of but you’ll need to account for.

  • hidden maintenace costs future/sinking fund (ie, the roof passes inspections but only has a life of 5-7 years left.)
  • non-performing tenants (rent rolls show $795/mo but you find out after closing they are 30-60 days behind)
  • HOA (numbers look great until you throw in that $375/qtr. HOA fee that cares for exterior maintenance but everyone on the block has peeling paint and wood rot)
  • utilities (who is responsible for these?)
  • rental licensing fee (Wyandotte County has a fee for rental properties and Kansas City, MO is considering one)

Just a few extra things to think about when purchasing income property. Remember, the key is to have a property that makes you money and not an investment house that costs you your vacation each year.

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