Resources / Guide

RENTAL PROPERTY NUMBERS

The Real Costs of Owning a U.S. Rental Property

Gross rent is not cash flow. The difference between a promising U.S. rental and a disappointing one is often the expenses that were ignored before purchase.

Property taxes

U.S. property taxes can vary dramatically between jurisdictions and even between nearby properties. Never estimate them solely as a percentage of the asking price. Verify the current bill and investigate whether a sale, reassessment or change in use could affect future taxes.

Insurance

Insurance costs depend on location, age, condition, replacement cost and coverage. Some markets or property types can be much more expensive to insure than a buyer expects. Obtain a real quote before closing whenever possible.

Property management

If you live in Australia, professional management should normally be part of the initial analysis rather than treated as optional. Fees can include monthly management, leasing, renewals, inspections, maintenance coordination or other charges depending on the company.

Vacancy and tenant turnover

Even a well-located rental can sit empty between tenants. Turnover can also mean cleaning, painting, small repairs and leasing costs. I prefer to allow for vacancy rather than modelling twelve perfect rent payments every year.

Maintenance and capital expenditure

Routine maintenance is different from replacing a roof, furnace, hot-water system or sewer line. Both matter. Older U.S. homes can be excellent investments, but the purchase price should reflect the condition of major systems.

Utilities and owner-paid services

Depending on the market and lease, an owner may pay water, sewer, trash, lawn care, snow removal, common electricity or other services. Understand exactly which bills remain with the owner after the tenant moves in.

Closing and setup costs

Title and closing charges, inspections, entity setup, insurance deposits and immediate repairs can increase the cash required beyond the purchase price. Build a complete acquisition budget before deciding how much property you can afford.

The number I care about

I focus on realistic net cash flow after ordinary operating expenses and sensible reserves. An attractive gross yield can disappear quickly when expenses are ignored. Conservative underwriting is less exciting, but it is much more useful.

Important: This article is general educational information and reflects experience and opinion, not personal legal, tax, financial, lending or real-estate advice. Property investment involves risk. Verify property-specific information and seek qualified professional advice for your circumstances.