Hi! New here and would like to learn a bit. I've heard people mention that a huge mistake new landlords make is not realizing there are costs other than PITI. What are those other costs? What kind of money should I have when buying my first rental, and what kind of money should that be (savings in bank, loans, etc)?
You should also take vacancy into consideration - every day you don't have a tenant in there is money out of your own pocket. You also want a pad for repairs, whether you do them yourself & just need parts, or if you call a handyman/contractor. Advertising & listing fees. Any remodeling that needs to be done. Outdoor maintenance - who's taking care of the lawn, snow-shoveling, gutters? Is there an HOA or condo fee?
Those are just off the top of my head as things you need to consider when running a property's numbers to see if it cash flows.
Hi Sarah, there is a great podcast about using the rental property calculator to estimate other costs outside of the ones you mentioned. We run every property we consider through this calculator. It allows for calculations of utilities, repair percentages (5-10%), capital expenses (5-10%) and property management (8-10%). Honestly we didn't get good at estimating until we ran 40-50 properties. Can't remember the title of the podcast but that's where we started and have had good luck.
@Sarah Otto there's a good post that runs through a lot of things to consider in this thread
@Sarah Otto check out this blog post as it has some really good info on estimating your numbers:
Thank you for that!
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