Owning a rental is about more than collecting rent. Knowing where the money goes each month is what tells you whether the property is really paying off. Here are the main expense categories to track.
The expenses most owners see
- Property taxes and insurance. Usually the largest fixed costs.
- Utilities you pay. Common-area electricity, water and sewer, or heat, depending on your lease.
- Repairs and maintenance. Plumbing, heating, appliances, and general upkeep.
- Management fees. Ask any manager what is included and what is billed separately.
- Vacancy. Every empty month is lost rent, so plan for some.
- Reserves. Money set aside for big items such as a roof or boiler.
- Accounting and legal costs.
Habits that help
- Keep every receipt and invoice in one place.
- Review your income and expenses monthly, not once a year.
- Track repairs and larger improvements separately, and ask your accountant how each is treated for taxes.
- Compare your costs year over year so surprises show up early.
This article is general information, not tax or legal advice. Talk with your accountant about your situation.
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