I'm pretty new to investing though I feel I have a grasp on what I would like to invest in. Buy and hold is an avenue I want to go down and would like to know the different types of expenses I should expect and learn about ones I would never think about. Here's what I have now with what I think I should expect and would to add on to my excel sheet...
Any other expenses I should be aware of? I would also like to do multifamily, are there big differences from SFH?
Capital expenditures ?
You will need some office supplies, paper for leases, postage,. Landlord association dues. We do MFH, so we have common area electric, water and increased landscaping costs. Many of these expenses can be pushed to tenant with SFH, but then you run the risk that they will not take care of the landscaping.
I think you can cross snow removal off of your list if you are in El Cajon!
For single family?
Management (if applicable)
HOA (if applicable)
After the hard costs, everything else is raining day fund IMO.
If you live in on the unfortunate states where you gotta pay for all the utilities, then of course factor those in!
Thanks for the answers already!
Jerome - I had CapEx in mind. I was thinking for more recurring expenses.
Bettina - I didn't think of landlord assoc. dues. In your area is this a heavy expense? And you're absolutely right, no need to worry about snow here! However, I'll be investing out of state.
Chris - Which states require the landlord to pay utility bills? I'm planning to invest in Indiana and Nebraska, are those 2 of those states?
One I might add is if you are purchasing a property at a significantly higher price than its previous sale price, it may cause the taxes to go up sharply based on the new sale price. I was surprised when the taxes on my first purchase went up $900 in the first year.
Be slightly conservative estimating the stuff you're not sure on and you'll be glad you did. You can never predict when your tenant's chickens will escape and greatly upset the old lady next door by pooping all over her manicured lawn, and the only thing that will pacify her is a bouquet of fresh flowers. Or when the chickens' heat lamp will get knocked onto a pile of cardboard and start a fire in the garage. Man, just don't allow your tenants to have chickens.
For MFH, pest control is common. Also, depending on the size and class;
loss to lease
PM can have two parts; the flat monthly fee and then the hourly rate for onsite staff
As to who pays the utility bills; it is not so much a state requirement but 'standard' practice at your properties local area. If every one else in your area is renting with, for example, water/sewer paid, it is very hard to rent with it not paid. Even if you reduce the rent to account for the expected costs.
I'm with @Oren K. in that I never see it itemized out on statements from property managers. However, it's an expense for me so maybe most people just (for better or worse) ignore it. And if you have an SFR it's easy to think "the tenant does the landscaping" but you won't want them doing tree trimming, making sure fences stay in good condition, etc. And when that overgrown tree rubs on your roof, well, that definitely ends up being your problem.
Your biggest issue for any first time landlord (or just plain owner) is assuming tenants will take care of the property like you take care of your home. I can (all but) guarantee that your dishwasher will last longer than the one in a rental unit. That their water bill (especially if you're paying for it) will be higher than yours. So you could think "oh, that new dishwasher will last 10 years!" but odds are in a rental I'd cut that expected life in half. You likely don't need to touch-up paint your home. Odds are you'll have to touch-up paint once a year with your rental if there's annual turnover.
Budget for surprise expenses such as a tenant getting pissed at you then destroying stuff.
Some tenants trash houses when they leave.
This is all great inside info.. thanks a lot guys! I've put this into an excel sheet for factoring a bottom line with my soon to be rentals. Needless to say I'll be making adjustments as needed.