Rental Property Expenses

[Josh Corby]

Hey guys! Can someone provide a breakdown off all the expenses involved with managing a rental property. I understand the basic expenses such as PITI. However, I'm struggling when accounting for maintenance costs and other miscellaneous costs and what percentage of the rent I should budget for each. Thank you guys, I really appreciate it!

[Tim Johnson]

Hi @Josh Corby, along with the mortgage payment, there are usually vacancy rate, property taxes, insurance, your share of utilities, capital expenses, maintenance, and property management fees to consider. Of course, if your mortgage payment is PITI (including taxes and insurance) you can nix those from the above list....and likewise, if you're managing it yourself you can lose the prop management fee.

When I don't know much about the property and am just crunching numbers I'll use 8-10% for vacancy rate, 8% for property management, and 5% for each of capex and maintenance (total of 10% for both).

If I know the property is new construction I'll use a smaller number for capex and maintenance - if the property is old, I may figure a bit more. Then, as you get a chance to actually see the property you can hone in on those numbers and even add "initial renovation costs" as a one-time figure.