Real Estate is a great investment, it really is. Oh sure you’ll hear people who will tell you that it’s tougher than it looks, and it is, and others tell you that it’s really not worth it. But the people who usually say that are the ones who don’t own any property. Really properly evaluating a property investment and then planning correctly can lead to a huge pay off, so why do some people seem to get in over there head? It’s because a lot of people don’t realize how many other fees there are that they need to pay for.
1. Appraisal Fee
Now this fee is not huge in comparison to the other fees we will talk about or even the house, however, all fees are important. Every bit of money that you spend will be eating into your profits and you’ll want to account for this. You need to get someone to appraise the house so you can get a loan. An appraisal will cost you anywhere from $200 to $1,000. This is not something you want to forget about, having to suddenly fork over an extra $1,000 while your in the middle of budgeting to renovate is not fun, make sure you add this in the budget.
2. Insurance
Just like getting a car insurance quote before you buy a car most real estate investors forget to calculate in home owners insurance. Now most Real Estate investors figure that if they’re renting they’ll have the rental fee cover this, or if they’re flipping the house the profit will cover this. As anyone who has invested in real estate will tell you don’t count your chickens before they hatch. In other words don’t count on money you don’t have yet, make sure you include these costs in your calculated costs, this way you do’t get bit by any surprises towards the end. In order to calculate this into your costs give companies such as Geico a call to gather quotes.
3. Repair Costs
While trying to calculate a return on your investment make sure you include in your estimated repair costs. Now this may be easy for the obvious repairs that you see needed on a piece of property before you buy it, but if you are planning to rent out you need to calculate in the future repair costs as well. If you don’t take into account these repair costs you could find yourself running at a loss due to charging to low for rent in comparison to the repairs that you make. The cost of future repairs will of course depend on the type of property you buy as well as location.
In conclusion there are plenty of costs that people new to investing in real estate don’t expect. Don’t let this deter you from your investments. Instead take into account these costs so that you can ensure your investments end up being profitable for you. This way you can sleep peacefully with the knowledge that your investments are safe.
David Glenn is a home improvement expert. He occasionally freelance writes about home maintenance and DIY home repair. He’s also knowledgeable about topics like how to improve social presence and building a reputation online.
