Here’s a list of five real estate rental property expenses not to forget about when calculating your ROI.
As a good real estate accountant or bookkeeper will say, ‘Report all of your income and expense as much as you can’.
Tenant Credit Reports
Checking the credit and background of prospective tenants is a must-do and one of the most important tips for a real estate landlord or property manager.
While the cost of running an individual report is small, the annual real estate expense for credit reports can really add up. Especially if you have a large multi family property or several single family rental homes.
Surprisingly, many beginning real estate investors overlook expensing out the finder’s fee paid for leasing the rental property.
One reason this happens is that the leasing agent will collect the upfront monies from the tenant – such as the first month’s rent and security deposit – then remit to the owner this money less the leasing fee paid out of those upfront monies.
The landlord mistakenly only accounts for the money he or she actually receives instead of the gross income from the tenant.
Back Office Property Management Time
The time spent on little tasks like answering incoming phone calls, balancing the bank statement, and endorsing rental checks can really add up over the course of a year.
One way to account for this time spent managing your real estate investment is to use a stop watch or timer on your computer. Then, log the minutes on a spreadsheet along with the date and a brief description of the task.
Onsite Property Management
Just as with the back office time, onsite property management time can add up as well. It’s also one of the most overlooked real estate rental property expenses.
This category includes tasks such as driving by or walking the property, meeting a vendor onsite, and checking out the competition.
Speaking of the competition, don’t forget to expense the time spent researching your market.
This can include things such as dues and subscriptions, property drive-bys, shopping the competition, and online research.
Common Real Estate Rental Property Expenses
Some of the most common expenses with a real estate investment property include:
- Property insurance
- Liability insurance
- Property management fees
- Repair costs when turning units