What expense always ends up being higher than you expected?

Question

Every experienced investor I've met has one category that always surprises them, For some it's maintenance, For others it's insurance.

What's the expense line item you've learned not to underestimate anymore?

Jamaal Pratt · Answer

From a property management perspective, I'd say maintenance is the expense owners most often underestimate.

At Emerson Property Management, we manage over 300 homes in the Houston market, and we've found that it's rarely the routine maintenance that catches owners off guard it's deferred maintenance. Small issues that aren't addressed early can quickly turn into much larger and more expensive repairs.

I'd also add turnover costs to the list. Many owners budget for vacancy but don't fully account for the cleaning, make-ready work, landscaping, paint, and repairs needed to get a property market-ready again.

The owners who tend to have the best long-term results are the ones who view maintenance as an investment in protecting the asset rather than simply an expense.

Stephen Delahoussaye · Answer

Great question Frankie. From the PM side managing about 20 doors in Nashville, the one that catches owners off guard every single time is turnover cost.

Everyone budgets for the obvious stuff like paint and cleaning. But when you actually add up everything that goes into a turn it gets ugly fast. Paint, carpet cleaning or replacement, patching drywall, deep cleaning, replacing blinds, touching up trim, maybe a new faucet or toilet seat, landscaping cleanup, re-keying locks, pest treatment, and then the lost rent during vacancy on top of all that.

A basic turn on a 3 bed rental in Nashville runs $2,500 to $4,000 easy. A rough one where the tenant left the place trashed can hit $8,000 to $12,000 before you blink. And if you have a unit turning every 12 to 18 months because you didnt screen well or your rent was too high, those costs compound fast.

The second one that sneaks up on people is plumbing. Not the $150 toilet repair kind. The kind where you find out a sewer line is collapsed under the driveway or tree roots have invaded the main line. Those can be $5,000 to $15,000 overnight with zero warning.

Third would be HVAC. Units always die in the middle of summer when you have the least negotiating power with contractors and the most urgency to get it fixed. Budget $5,000 to $8,000 for a full replacement and hope you get 15 years out of it.

Adam S. · Answer

Turnovers on tenants who’ve been in place 20+ years… that’s the one that’ll humble you real quick.

I picked up a multi-family a few years back with three long-term tenants, and let’s just say; there’s only so much “updating around someone” you can do. At some point, it’s game on: appliances, kitchens, bathrooms… the whole thing.

The 2nd floor came in around $28K, and the 1st floor, which was basically a full gut, landed closer to $30K in total rehab costs. Not exactly pocket change.

The good news? Both are 3-bed units renting at about $4K/month, so we were able to recoup within a year. The bad news? Writing those checks still hurts a little 😄

We usually see this when buying from long-time mom-and-pop owners who’ve held properties for decades. This one was a pre-COVID purchase, but the real rehab fun happened in 2023 and 2026.

Just part of the game… but definitely not the line item to underestimate.  Harder to find these steals now..  The property is worth almost three times what was paid.

Stephen Delahoussaye · Answer

Turnover costs. Every single time.

Owners budget for the mortgage and maybe a little maintenance, but nobody accounts for what happens when a tenant leaves. You have got the lost rent during vacancy, the make ready costs to get the unit back in shape, the marketing to find someone new, the screening, and then the risk that your next tenant is worse than the last one.

I manage about 20 doors in Nashville right now and turnover is the number one thing I try to minimize for my owners. A good tenant who stays three years is worth way more than squeezing an extra fifty bucks a month out of someone who leaves after twelve months.

The other one that sneaks up on people is deferred maintenance. Owners skip the small stuff to save money and then get hit with a five thousand dollar HVAC replacement that could have been a two hundred dollar service call if they had caught it early. We do quarterly inspections on every property we manage specifically to catch those things before they turn into real problems.