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Projecting Residential Investment Expense | International Residential Real Estate Investors Association
Monday January 22nd 2018

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Projecting Residential Investment Expense

Of course, the  first best way  to do this is to have many years of experience from which to draw and accurately predict based on known sources.  However, for a new investor or an investor in a new market, this is often not possible.  Where to go?

My recommendation is to look at as many rental properties for sale as possible.  If there aren’t many for sale, then you should steer clear.  However, if they are, request the tax records and income and expense statements for as many properties as possible.  Keep track of construction similarities and compare costs.  After you have looked at enough properties, you will develop a sense of realizable average annual expense and capital costs.  When looking at costs, you must look at capital cost to as it may not appear on the income statement.  Without the total view you will under estimate your annual cash needs.

Secondly, complete a thorough inspection of the property identifying deferred maintenance.  Build this into your plans as well.

Third, if it is a multi unit property factor in the requirements defined in the Property Condition Report too.

In general, this thorough approach will reasonably project expenses and protect you from cost overruns.

Blake Ratcliff

The Real Estate Investor

“The IRREIA - Making residential real estate investing more fun and rewarding
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