Want to Figure Profits? You'll Need to Count the Costs.

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If you want to calculate your profits or cash flows, you need to count the costs. If you want to count the costs, you need to be aware of all of them. Here are the major categories of expenses.

• Purchase Price: The initial cost of the property, marking the start of your financial journey.

• Closing Costs: Includes title insurance, attorney fees, and other processing fees.

• Property Taxes: Annual dues to keep your property in good standing with the local government.

• Insurance: Covers potential disasters with property and landlord insurance.

• Maintenance and Repairs: Ongoing costs to keep your property in good condition.

• Property Management Fees: Fees for hiring someone to manage tenant issues and property upkeep.

• Utilities: Bills for water, electricity, gas, and sometimes trash removal.

• HOA Fees: Fees for properties within a homeowners association, covering community amenities and maintenance.

• Vacancy Costs: Expenses incurred when the property is unoccupied, without rental income.

• Capital Expenditures: Big-ticket items like roof replacement or HVAC upgrades, requiring savings allocation.

By keeping these expense categories in mind, you'll be better prepared to handle the financial rollercoaster that is real estate investing. For more on each of these, click here.