Surviving a Recession in Real Estate (Part 5)
Posted By admin on November 2, 2009
Thank you for revisiting you can still subscribe to my RSS feed. As Always Thank You for visiting!
Reducing cost on maintenance is accomplish by planning major repairs. If the property needs a roof, plan and budget for that repair.
Each month that you receive the rental payment the money should be divided by expense then the remaining would be considered profit. For example, if the annual property taxes are $1200 then the monthly property taxes are $100 a month. If the annual insurance premium is $850, then the monthly insurance premium is $70.83 month. If there is a mortgage, the principal and interest payment maybe $250 a month. The real estate investor needs to account for maintenance, as well. Most real estate investors that I spoke with and including myself use $75.00 each month for maintenance. The investor may want to consider setting aside some money for accounting and legal fees from the monthly rental amount, as well. Fifty dollars for both should be sufficient. This amount will give you more than enough to cover the additional income tax preparation fees when filing income taxes.
To recap, the monthly expenses are:
$50.00 accounting/legal
$75.00 maintenance
$250.00 principal and interest (mortgage)
$100.00 property taxes
$70.83 insurance
$545.83
This example has a three bedroom home that currently rents for $750.00 a month, after expenses, the investor has a profit of $204.17 a month or $2450.04 annually. Pretty good, huh.
Well, this too may need to be evaluated for cost reduction so that your profit margin can be increased. You may want to consider refinancing for a lower rate this one change alone may save you hundreds monthly, and thousands in interest payments, annually. You may want to consider an area where the rental values are higher when purchasing your investment property.
You may want to increase your insurance deductible, thereby reducing your annual insurance premium. An important note here, unlike your auto or health insurance, the deductible for landlord insurance or home insurance is taking out of the claim payment.
Taylor-Brown's Related Post s' Related Posts - Good Indication that You Need to File a Property Tax Appeal It is often difficult to determine the indication of needing to file a property tax appeal, but there are signs. The following are a few good indication that a property tax appeal is necessary: One indication is when the description of the property does not match. An example of such an......
- 3 Reasons Why It Would Have Saved You Money to File Your Property Tax Appeals Months Ago Property taxes have been in the headlines for at least the last two years. With high property taxes being at the forefront of the homeowners' mind. Realtors the state over are encouraging homeowners to file property tax appeals. To help you determine if a property tax appeal is right for......
- Lack of Property Taxes Tops News in Northwest Indiana The Times has an article named, Lake Commissioners Pledge Veto for Food, Beverage Tax. According to this article the Lake County Commissioners plan to veto the increase in tax on food and beverage. Alot of the commissioners state that they do not want to go back on their word......
- Great News, the End to High Property Taxes Is Almost Here On February 10, 2009, the Indiana Senate passed an amendment for the permanent cap to property tax bills. The bill passed the Indiana Senate with an overwhelming majority of 34 to 16 vote. The bill goes to the House for consideration, but House Speaker, Patrick Bauer, suggested that the House......
- What Is Assessed Value and How Does It Influence My Property Tax Image by Getty Images via Daylife In Indiana, the property tax that is paid on a home, land, building, business machine, or product for sale is determined by the assessed value that the assessor assigns to the asset. Once the assessed value is determined the amount of property taxes paid......
- Property taxes on my mind (This is a repost of my article that was first posted as a guest-blog post last week on the Five...
- Running through payback time on a mortgage refinance Five Cent Nickel posted on how to calculate the payback period for a potential mortgage refinance. It's indeed important to...
- Eight Steps To Lowering Your Property Tax Bill. Those of you who own property know that sometimes the property tax bill shows up and it is not pretty....
- Florida Property Tax Woes - Town Hall Meetings Scheduled I've written in the past about the Florida homeowners insurance problems, and now another financial issue facing homeowners is going...
- How to Shop for Affordable Health Coverage if You Don’t Have Health Insurance through Work There are now over 50 million Americans without health insurance. Most people that have insurance are lucky enough to get...
About the author
Social comments and analytics for this post…
This post was mentioned on Twitter by snorbrown: http://tinyurl.com/ydu3pvt...