What’s your biggest expense as a real estate investor?

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What’s your biggest expense as a real estate investor?

Suly B.

Rental Property Investor · Denver, CO · Member since 2018 · 81 posts · 62 votes

Whether you own 1 or 100 investment properties I'd love to get your answer.

Thank you kindly, Suly

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Greg M.

Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes

Mortgage interest. OK, so maybe that wasn't the answer you were looking for...

Excluding updating/remodeling, it would likely be plumbing and issues caused by plumbing problems. There is always a clogged drain or leaky pipe or fixture that needs to be replaced. I had a toilet leak and it caused damage to the walls, ceiling, and a light fixture on the floor below. Had it all fixed and a few months later another toilet leak from a different issue damaged the exact same area that I had repaired. This was after I had replaced this toilet maybe 2 years earlier after a leak damaged the walls and ceiling.

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Greg M.
Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
7y
Mortgage interest. OK, so maybe that wasn't the answer you were looking for...
Excluding updating/remodeling, it would likely be plumbing and issues caused by plumbing problems. There is always a clogged drain or leaky pipe or fixture that needs to be replaced. I had a toilet leak and it caused damage to the walls, ceiling, and a light fixture on the floor below. Had it all fixed and a few months later another toilet leak from a different issue damaged the exact same area that I had repaired. This was after I had replaced this toilet maybe 2 years earlier after a leak damaged the walls and ceiling.
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Suly B.
OP
Rental Property Investor · Denver, CO · Member since 2018 · 81 posts · 62 votes
7y
@Greg M. Both answers are very helpful Greg, I appreciate your response. Leaks are a pain in the neck, it can cost thousands in some cases.
1 Reply
Raul R.
Rental Property Investor · New York City, NY · Member since 2017 · 493 posts · 386 votes
7y
@Suly Bolanos
Biggest expense has been HVAC.. Seems every purchase I make I need to update HVAC soon after and if I don’t it breaks in the hottest day of the year!!
9 Reply
Johann Jells
Rental Property Investor · Jersey City, NJ · Member since 2011 · 1k+ posts · 876 votes
7y
In Order:
Mortgage
Taxes
Insurance
Maintenance
Utilities (water, HW, laundry and public area lighting)
13 Reply
Jill F.
Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
7y
Mortgage Interest followed by real estate taxes
5 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
well obvious ones are mortgage interest and tax.s
but for me who is full time in the business not just a landlord
Its staff salaries.. followed by travel and lodging followed by entertainment IE taking my vendors to dinners etc.
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Suly B.
OP
Rental Property Investor · Denver, CO · Member since 2018 · 81 posts · 62 votes
7y
@Raul R. Good point! Tenants will immediately notice when the HVAC system is not working properly. Therefore, a well-maintained HVAC system is of utmost importance. Thank you for your response.
3 Reply
Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
7y
The purchase and rehab or stabilization, obviously.
Then W/S/G on the multi-families, appliances (especially w/d provided places) and hot water tanks.
Funny how they come in waves. 1 year will be washing machines, another h/w tanks, another furnaces or a/c units. Then 3 roofs...
5 Reply
Rachel H.
San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
7y
@Suly B. Definitely landscaping such as mowing yards and raking leaves being in the mobile home investing business. Roof, plumbing and flooring issues are also a constant depending on the age, wear and tear. Hope that helps!
2 Reply
Suly B.
OP
Rental Property Investor · Denver, CO · Member since 2018 · 81 posts · 62 votes
7y
@Jay Hinrichs , @Johann Jells , @Jill F. Operating expenses, taxes, mortgage payments, insurance: Yes indeed thank you for your answers!
Do most real estate investors consider the taxes that will be owed from the passive income? Or do they only consider property taxes, state/local taxes etc?
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @Suly B.:

@Jay Hinrichs , @Johann Jells , @Jill F. Operating expenses, taxes, mortgage payments, insurance: Yes indeed thank you for your answers!
Do most real estate investors consider the taxes that will be owed from the passive income? Or do they only consider property taxes, state/local taxes etc?
I don't include income tax. as it not static one year I might pay 500k in income tax the next year only 300k.. were as property tax is static for the most part or only moves maybe 1k at most.. but I am not a landlord I built and develop..
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1 Reply
Charles Kao
Specialist · Grand Rapids, MI · Member since 2016 · 1k+ posts · 611 votes
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@Suly Bolanos
Time
13 Reply
Johann Jells
Rental Property Investor · Jersey City, NJ · Member since 2011 · 1k+ posts · 876 votes
7y
Originally posted by @Suly B.:

@Jay Hinrichs , @Johann Jells , @Jill F. Operating expenses, taxes, mortgage payments, insurance: Yes indeed thank you for your answers!
Do most real estate investors consider the taxes that will be owed from the passive income? Or do they only consider property taxes, state/local taxes etc?
I assumed we're talking about whats on your form E or corporate return for your real estate business, not your 1040. Income tax is not a business expense. Once it transfers to the 1040 income tax is the same no matter what the source.
2 Reply
Jill F.
Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
7y
@Johann Jells I was referring to property taxes, which here in Ohio are assessed by the county semiannually.
2 Reply
Damaso Bautista
Rental Property Investor · Hawthorne, CA · Member since 2018 · 655 posts · 900 votes
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@Suly B.
Funny how different the answers are. I would guess that it depends on what level you are at.
For me its the 25% down payments and rehab costs. I like to put a nice product in service so I spend alot of money on rehab so after putting a place in service,, future repair costs are few and far between.
5 Reply
Johann Jells
Rental Property Investor · Jersey City, NJ · Member since 2011 · 1k+ posts · 876 votes
7y
Originally posted by @Jill F.:

@Johann Jells I was referring to property taxes, which here in Ohio are assessed by the county semiannually.
Jill, you said "Do most real estate investors consider the taxes that will be owed from the passive income?". That seemed to be talking about income tax not property tax. Property tax is just part of the overhead like mortgage and utilities.
1 Reply
Damaso Bautista
Rental Property Investor · Hawthorne, CA · Member since 2018 · 655 posts · 900 votes
7y
@Suly B.
Funny how different the answers are. I would guess that it depends on what level you are at.
For me its the 25% down payments and rehab costs. I like to put a nice product in service so I spend alot of money on rehab so after putting a place in service,, future repair costs are few and far between.
1 Reply
Jill F.
Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
7y
Originally posted by @Suly B.:

@Jay Hinrichs , @Johann Jells , @Jill F. Operating expenses, taxes, mortgage payments, insurance: Yes indeed thank you for your answers!
Do most real estate investors consider the taxes that will be owed from the passive income? Or do they only consider property taxes, state/local taxes etc?
Hi Johann, The questions you attributed to me were actually posed by Suly Bolanos in a post were I was mentioned. My initial answer was mortgage interest and real estate taxes. I later clarified my use of 'real estate taxes' in response to your question as property taxes that are assessed by the county. The quotation notations here are sometimes confusing.

2 Reply
Clifford Paul
Rental Property Investor · Member since 2018 · 483 posts · 956 votes
7y
@Suly B.:

Sports cars, cigars and scotch! K
6 Reply
Andrew Flora
Rental Property Investor · North Vernon, IN · Member since 2018 · 136 posts · 192 votes
7y
vacancy/tenant turnover. Vacancy typically always costs me at least 1 month of rent on average, and the tenant turnover can be costly if it involves interior cosmetic repairs to get the unit ready for the next tenant. Tenant turnover also occasionally involves an eviction which can be expensive assuming I will rarely get the money I am awarded in court.
It hasn't cost me much yet but CapEx will hit hard when it's time to start replacing HVAC, Siding, Roofing, Parking Lots, Etc.
7 Reply
Suly B.
OP
Rental Property Investor · Denver, CO · Member since 2018 · 81 posts · 62 votes
7y
@Damaso Bautista Oh yeah, a lot of good answers were mentioned, thank you for yours. Spending money upfront for improvement helps increase the value of your property long-term.
0 Reply
Emmett O.
Rental Property Investor · Philadelphia, PA · Member since 2017 · 24 posts · 7 votes
7y
@Raul R.
Feeling this exact thing right now. Bought a place, placed a tenant, and a week later the 1-3 year old furnace goes! What luck!
2 Reply
Logan Russell
Investor · Botkins, OH · Member since 2017 · 21 posts · 15 votes
7y
With two gut rehabs going on that the moment, holding cost, labor, and construction materials are like a black whole you throw checks into.
4 Reply
Sherwin Gonzales
Rental Property Investor · San Francisco, CA · Member since 2015 · 236 posts · 156 votes
7y
@Suly Bolanos great question!
I agree with @Charles Kao...TIME is my biggest expense.
You can earn money when you lose it, but when time is lost, it is gone forever.
2 Reply
Aaron DiCaprio
Rental Property Investor · Philadelphia, PA · Member since 2019 · 89 posts · 27 votes
7y
Aside from interest and taxes, a lot of the major repairs are akin to your primary residence: roof, HVAC, plumbing, etc.
@Andrew Flora - How long is the eviction process in your area?
2 Reply

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