Anyone buying real estate as an investment knows the type of rigorous financial analysis necessary to make sure that the individual investment property will be profitable for the duration of the holding period. When running your numbers it is critical that the investor avoid underestimating expenses or a cash flow positive property could quickly become cash flow negative. Most investors can determine the upfront costs and common expenses associated with buying a property pretty accurately but occasionally they miss some of the some hidden costs or expenses that can creep up after settlement. This article will identify 4 hidden costs that can pop up after purchasing an investment that can have a profound effect on your bottom line.
1.) Rise in Condo/HOA Fee:
When you buy a property that is part of condominium association or home owners association (HOA) you will almost always pay a condominium fee or HOA fee that covers your share of the expenses for the comment elements of the property. Sellers and associations are required to make financial disclosures to buyers with respect to the condo/HOA’s budget and the individual unit’s annual or monthly obligation so the buyer should be well informed as to what amount is due monthly, quarterly or annually. What some buyers fail to understand is that condo/HOA fees increase over time as expenses like insurance and building staff salaries increase. To be safe, research the property’s condo/HOA fee history to see what the average annual increase has been historically or budget a reasonable annual or biannual increase into your projections.
via 4 Hidden Costs That Can Sneak Up After Buying An Investment Property.
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