A Complete Checklist to Refer to Before Putting an Offer on a Potential Investment Property
o If you are thinking about putting an offer on an investment property, the most important thing you can do is “run the numbers” first. What does this mean? This translates into creating a spreadsheet of what your expenses will be on a monthly, quarterly, or yearly basis. You should also try to account for expenses that are billed on an as-needed basis. Here’s a quick checklist that you can refer to help start you on this journey.
- Mortgage. Evaluate what your expenses will be by getting pre-approved before putting an offer on a property.
- Escrow. This includes property taxes and insurance costs.
- HOA or Condominium Fees. These may be collected on a monthly or quarterly basis.
- Utilities. If you include utilities ( electricity, cable/phone/internet) in your rent payment, this will still be an expense for you.
- Security Fees. This refers to a home alarm system.
- Property Management Fees. If you employ a service, this could be a set monthly fee or based on the cost per rental.
- Trash Removal. In some areas, this is not included in tax payments.
- Pest Control. Depending on the area of your investment property, this could be a contract you have with a local service for a monthly or quarterly service.
- Water Service. This expense is regularly calculated quarterly.
- Contracts. If you decide to get a contract for things like appliances, hot water heater, air conditioning and heating units, in order to keep an eye on aging units.
- Service Calls. This could include fixing a garbage disposal, electricians or pest control. If you don’t have a contract, these will be calculated on an as-needed basis.
- Landscaping/Snow Removal. These expenses are billed only at the time when service is rendered.
- Large Purchases. This could include oil, natural gas or propane delivery, replacement furniture if you offer a furnished property, replacement/service for broken appliances or units.
- Tennant Changeover Fees. This could include the cost of painting, cleaning, trash removal and credit checks.
Depending on whether you are purchasing a vacation rental unit or a long-term rental property, could wildly influence where the bulk of your money is allocated on your spreadsheet. It could also determine if this unit is really the great buy it looks to be at first glance.