Estimate of expenses

3 Replies

Im new to REI. Can anyone give me a rough percent estimate of total expenses including tax, insurance, and everything else.

There are a lot of variables based on your area, for example some areas have high RE taxes and others are lower. I figure 40% as I’m in an area that has fairly low taxes. I understand the national average to be 45-50% of gross rents. That is just a starting point or guide, you need to evaluate each property seprately.

8)

Originally posted by "invstr":
Im new to REI. Can anyone give me a rough percent estimate of total expenses including tax, insurance, and everything else.

Ignore the debt service and figure 35% to 40% will cover everything. This assumes you pay for property management. Even if you do it yourself you still should budget something as you do not want to work for free.

John Corey

Invstr,

Throughout the United States, operating expenses run 45% to 50% of the gross rents. That includes capital expenses, which are not technically operating expenses. It does not include the mortgage payment.

The most common mistake new investors make is to ignore all the real world expenses, such as evictions, court costs, advertising, entity maintenance, legal fees, damage done by tenants (in excess of the security deposit), lawsuits, etc, etc, etc.

Good Luck,

Mike

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here