Reserves/Prepaid costs - include when running numbers?
I just received a cost of closing work sheet from my lender for a buy and hold rental property we are purchasing. Closing costs are roughly $3,900 and "reserves/prepaid costs" are roughly $1,500. Do I need to include the reserves/prepaid costs in my numbers for upfront costs on this deal? I have closing costs, but was not sure these need to be included when looking at ROI. Thanks!