If you are like most investors in real estate, you want to make money. Unfortunately, Murphy has a way to continually take away your profits at the earliest moment. Even though you have accounted for all of the known events, and even all of the unseen events, the ‘other’ events happen. These hidden rental expenses are real, and they add up.
Some expenses are a part of running a business, and really have no bearing on the rental property you are purchasing. But you would not have the expense if you did not have the rental. So it impacts your cash flow and profitability. Some expenses are very small, but they indeed add up.
Some expenses are obvious, but who would ever think to include that in the cash flow analysis of a rental property.
Were you aware that driving to and from the rental will cost you something? Of course, did you account for it in your analysis? It could add up to be several hundred dollars a year.
Were you aware that sending letter(s) to a tenant would cost you something? Did you account for it? It may only be a couple of dollars, but it adds up.
You may want to get a business business liability policy. How does that affect the cash flow of the rental?
Tenant gifts? Even $50 adds up fast. Bad tenants? Those are the worst. Evictions? Bed Bugs? rental licenses? Rental inspections? Tax preparers? Incorporating? Time and effort? YIKES!!
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What expenses in your own life have popped up, some that may have been expected but were unplanned? Or even totally unexpected?