<\/span><\/h2>\nRental income is only one side of the equation. A useful rental property investment<\/strong> analysis should account for every significant expense associated with owning and operating the property.<\/p>\nCommon expenses may include:<\/p>\n
\n- Mortgage principal and interest<\/li>\n
- Property taxes<\/li>\n
- Property insurance<\/li>\n
- Routine maintenance<\/li>\n
- Repairs and replacements<\/li>\n
- Property management fees<\/li>\n
- Utilities paid by the owner<\/li>\n
- Advertising and tenant-screening costs<\/li>\n
- Landscaping or common-area expenses<\/li>\n
- Association fees where applicable<\/li>\n
- Legal or accounting costs<\/li>\n
- Licensing or inspection expenses where required<\/li>\n<\/ul>\n
You should also allow for periods when the property is vacant. Even a well-managed rental can experience turnover between tenants.<\/p>\n
Large expenses deserve special attention. A roof, heating or cooling system, plumbing system, electrical components, windows, or other major building elements can eventually require significant expenditure.<\/p>\n
A property may have positive monthly cash flow today but become less attractive if several expensive components are approaching the end of their useful lives.<\/p>\n