Jun 9 • General discussion
Understanding Property Expenses: The Numbers Most Investors Miss
Most deals don't fail because the rent estimate was slightly off.
They fail because expenses were underestimated.
When analyzing a property, it helps to separate expenses into two categories.
Predictable Expenses
• taxes
• insurance
• utilities
• HOA fees
Variable Expenses
• maintenance
• vacancy
• turnover costs
• capital expenditures
These create most of the surprises.
A common mistake is using only mortgage, taxes, and insurance when evaluating a property.
That can make a weak deal look strong.
Exercise
Take a property you've recently looked at and create a complete list of every expense you can think of.
Which expense was easiest to forget?
Discussion
Which expense category do you feel least confident estimating?
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Understanding Property Expenses: The Numbers Most Investors Miss
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