Archive for November, 2013

HomeVestors Knows How To Analyze The Costs Before Purchasing A Rental Property

Tuesday, November 5th, 2013

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There are many costs that many investors don’t consider before getting involved with a rental property.  Those who have a fair estimation of these costs are able to perform a proper analysis.

Dallas, Texas HomeVestors is the nation’s number one home buying franchise and has helped real estate investors purchase 50,000 properties over the years.  The company knows that investors who are thinking about purchasing a rental property need to understand the costs of the business.  While the prospect of collecting rental income every month excites many investors, they should also have a firm understanding of the negative cash flow as well.

When thinking about purchasing a rental property, understand that there are costs for management fees, marketing, maintenance, services, insurance and others.  These all need to be considered when understanding the cash flow of a rental property.  While many investors may find a property that they feel would be profitable, all the calculations need to be performed before committing to it.

Before purchasing a rental property, understand how it will be managed.  Those who hire a management company are looking at costs that greatly exceed those that plan to manage the company on their own.  Those who own large rentals are going to be subject to hiring a management company in order to handle all the day-to-day activities.  These costs are in the ballpark of $300 to $500 a year per rental.  Before actually purchasing a rental property, check with the various property management companies and get a quote from each in order to determine which is the best value.

Those who are thinking about purchasing a rental property also need to account for marketing fees that are required to keep the property full and avoid vacancies.  These fees generally account for $150 to $200 a year per rental.  Rentals that are in excellent locations that draw tenants in naturally won’t have to spend as much and can reduce these numbers somewhat.

Another huge cost that has to be assessed before purchasing a rental property is the maintenance.  This needs to be performed on a set schedule and an owner has to avoid becoming lax regarding the proper maintenance.  Rental property owners can expect to spend about $500 on maintenance a year per rental.

Before purchasing a rental property, understand what the insurance will cost as well.  While this can vary greatly by geographical location, expect to spend anywhere from $200 to $300 a year per rental.

Before purchasing a rental property, have a firm understanding of all the costs that go into it.

About HomeVestors of America Inc.

Dallas-based HomeVestors of America, Inc. is the largest buyer of houses in the U.S., with 50,000 houses bought since 1996. HomeVestors trains and supports its independently owned and operated franchisees that specialize in buying and rehabbing residential properties.  Most commonly known as the “We Buy Ugly Houses®” company, HomeVestors strives to make a positive impact in each community.  In 2012, for the seventh consecutive year, HomeVestors was among the prestigious Franchise Business Review’s “Top 50 Franchises,” a distinction awarded to franchisors with the highest level of franchisee satisfaction.  For more information, visit www.HomeVestors.com.