As we wrap up our weeks posts about investment costs I want to end with a look at two costs that are sometimes under priced. Maintenance and utility costs are not always taken into account as the real estate comps are being studied; but they should be. Maintenance is by far the most difficult number to estimate. It depends on the property, whether you fix some of the problems yourself or hire outside help, and random luck. Given that let’s look into different factors to take into account.

Property Type – When you evaluate different properties remember to take into account the type of property. If it’s brick you won’t have to paint or worry about wood root. Decks need constant maintenance. A property with wood or concrete floors will be easier to clean and will not have to be replaced when a tenant moves out.
Property Size – A smaller property is easier to maintain than a larger property. The larger property will be more expensive to maintain when you are replacing the larger roof, painting the interior walls, etc.
Property Location – Consider your proximity to the property. If you buy a property 30 miles away, over the course of a year you can spend a decent amount of gas money driving back and forth.
Your personal management style – How often will you do maintenance work yourself vs hiring help? For instance, when a unit needs painting will you paint the rooms or hire a painter? Hiring professionals is definitely more expensive, but you have to be realistic about how much you will personally do, especially if you are looking at a lot of units.

And lastly, let’s look at utility costs….Be sure to check what the tenants pay for and what the owner pays for. This includes all the utilities and lawn maintenance. In addition, there may be owner expenses like parking lot lights and trash bin service to think of.

I hope these investing strategies from the past few days will make things go more smoothly for you on your next investment deal!


Leave a Reply

Your email address will not be published. Required fields are marked *