Owning property isn’t just about collecting rent. To maintain profitability, you need to understand and monitor your property’s operating expenses.
What Are Operating Expenses?
These are the ongoing costs associated with owning and managing a property — excluding mortgage payments and taxes. Think utilities, maintenance, insurance, and management fees.
Key Categories:
- Maintenance & Repairs: AC servicing, plumbing, painting, elevators.
- Utilities (if landlord-covered): Water, electricity, gas.
- Insurance: Property insurance or landlord liability insurance.
- Property Management Fees: If you hire a company to handle leasing, maintenance, and legal support.
- Cleaning & Security: Common in buildings with shared facilities.
- Legal & Accounting Fees: For lease drafting, evictions, or financial reports.
Why It Matters:
Understanding these expenses allows you to:
- Set more accurate rent prices.
- Forecast profitability.
- Minimize surprises.
- Optimize spending through vendor contracts.
Conclusion:
Monitor, track, and evaluate your operating costs regularly to protect your investment and improve return on investment (ROI).
