Housing Investment - Be Careful Of Fees

I am a big supporter of the real estate investing

. I positively believe that when executed responsibly, it is one of the biggest drivers of the wealth available to a person. The main key to this business is responsible investing! That is you should not use those nasty objects like ARMs, must accurately do your due diligence and should never buy properties beyond your means.

However, here I would like to talk about the real estate investing expenses which you must surely account for before moving ahead to buy a real estate!

1. Maintenance and Repairs:

Properties, like everything else require maintenance and should be repaired occasionally. You must figure about 10% allowance for the maintenance of your property.

2. Bad or Uncollectible Debt:

If you would be living in your home, then this should not concern you, however when renting out, you must take into consideration times when renters would skip out on you.

3. The Mortgage Payment:

Remember that just because you are capable of affording a mortgage payment does not necessarily mean that you must. It really makes sense to locate house which is less costly than what you can pay for. You can put the money you save in some other investment.

4. Insurance:

The main thing you should keep in mind is that you are not under insuring your property. Though underinsuring would cost you less monthly payments, yet if some tragedy strikes, then you may need money to rebuild your house and then you will never be able to forgive yourself.

5. Taxes, Taxes, Taxes:

Never underestimate the taxes you pay. If you are really serious to buy a property then you'd have a pretty good idea of what it will cost you and then you can easily calculate your monthly expenses on the tax too.

6. Vacancy Allowance:

Though it is difficult to exactly calculate this figure as occupancies vary according to the area in which your property is located. You can try asking the people in the area engaged in managing rental properties as to the vacancy allowance prevalent in the area.

If you have plans of converting your house into a rental, you must factor the vacancy allowance when you calculate. That is, as to how many months in the entire year you expect your real estate to be vacant.

7. Utilities:

If you intend to stay in the house you purchased then you should add the expenses for the utilities as you will be paying them. However, if you want to give your property on rental, then you must decide as to who would pay for the utilities.

You must remember that a property which may initially look good could quickly turn sour if you somehow fail to do requisite research beforehand apart from calculating all the real as well as potential expenses.

by: Michael C. Miller

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