Don’t forget about these seven expenses
when you’re buying rental properties.
I forgot about the seventh one for the longest time,
and it cost me a lot of money.
So when you’re calculating if you should buy a rental property or not,
you’re gonna take the rent minus these seven expenses.
And if there’s two to four hundred dollars a month left over net net,
you should buy it. The first expense is the mortgage.
Now, this may seem obvious,
make sure you’re taking the principal and interest out of your rent.
You can get this easily by looking at a mortgage calculator.
Number two is real estate taxes.
You don’t pay for this monthly,
and this doesn’t come out of your mortgage.
So you need to set money aside every single month
so that the end of the year,
you’re paying your real estate property taxes
out of the money you already saved.
No.3 is insurance.
You need to get specific insurance for your rental properties.
You can get quotes on this from brokers
and get connections from other landlords in your area.
Put money aside for this. No. 4 is property management.
Even if you’re managing the property yourself,
you need to set about 10% of gross rent aside every single month
in case you end up hiring it out.
You don’t want to have not calculated for it
and then hire it out and negatively cash flow.
No. 5 is maintenance. We set $150 per Door aside every single month.
Now, this is not something you’re going to use every single month,
especially if you use my strategies.
However,
this is something you might have to tap into a few times a year
and you want the money to be there.
No.6 is often overlooked and it’s vacancy.
You need to set at least 5% of gross rent aside every single month
for when your properties are not rented.
Hopefully they’re rented for two,
three, or four years in a row.
But when the tenant moves out before another tenant moves in,
you still have most of these other expenses
and you’re not collecting rent.
You’re gonna pull from this pool when you do that.
And last but not least, number seven,
the one that got me in a lot of trouble at first is Cap X.
You need to set money aside every single month
for capital expenditures.
We’re talking bigger things like roofs or water heaters or windows.
Most of your maintenance money is going to be taken by little things.
Every few months you need to set bigger chunks of money aside
so that when big expenses come,
they come out of this and not your account.
Goal is going to be to buy rentals using none of your own money
and own them using none of your own money.
So make sure to use this formula
and follow me for more tips on how to buy real estate,
maintain real Estate. All using none of your own money.
If you want to get started on that for free,
just simply DM me the word new
and I’ll send you my latest 20 minute training
that’s absolutely free. That can help you get started.