The Costs of Buying and Owning Investment Property

Buying and owning investment property is a lot like buying and owing a residence. While you want to get a good deal on investment real estate, you should avoid cutting back on the property simply because you are not going to be living there. You don’t want to have unhappy tenants who call you for repairs all of the time. Also, you could very well end up living in the residence yourself. The point is not to skimp.

Before you sign on the dotted line, you should get a professional home inspection so that know every flaw the property has. Whether you are purchasing a house, condo, or small building with a few rental units, you’ll want to get an inspector that specializes in the type of property you want to buy. Remember that the bigger the property, the more potentially expensive problems you may face.

In addition to mortgage and real estate taxes, here are some costs that you may have to pay when you buy and own investment property:

Homeowners association fees and monthly maintenance fees: If the rent you are charging does not cover these fees, they are ultimately your responsibility.

Utilities: While your tenant will pay most of these directly, other utility costs will be included in your tax bill. You also may be responsible for paying the water bill and other costs.

Landscaping: Be sure to list what the tenant is responsible for if you are renting out a single-family house. If you are renting out a condo, the landscaping probably won’t be your responsibility. You’ll pay a maintenance fee every month for the management company to take care of it.

Repairs/maintenance to the exterior and interior: This includes repainting in between tenants, carpet cleaning, and any damaged parts of the unit.

Getting the property in rentable condition: Perhaps the biggest cost of buying and owning investment property involves the repairs that are necessary to get the property in rentable condition. You should take a lot of time to figure out the cost of repairing the unit after getting a professional home inspection.

Be sure to consider the advantages of knowing the true value of your home. You can obtain a free home valuation report from Neighborhood IQ to find out how much a property is worth, especially after your fall and winter home improvements and maintenance projects are completed. Also, the Home Loan Advisor can analyze your property, current market conditions, local market comps, and other variables in our proprietary algorithm, and match you with potential lenders.