This section explains how to allocate the expenses that you incur in buying an investment property, across your timeline using Smart REIA.
The Expenses section takes into account the price/fee that you will incur to buy the investment property. It includes expenses such as accounting, advertising, council rates/property taxes, insurance, legals/closing costs, management fees, owners corporation, miscellaneous expenses, any other expenses, repairs and maintenance, and utilities.
1. Navigate to Smart REIA Training-1 and then to the Smart REIA page.
The Smart REIA page will be displayed.
Let us look at the Expenses section. The field descriptions are as follows:
Accounting: The accounting expenses, per year, to manage the investment property that is purchased.
Advertising: The expenses that you pay for advertising, for re-listing, re-renting when a tenant changes, the property.
Council Rates /Property Taxes: The taxes that you pay for the property and the amount that you pay for all the services provided by the council.
Insurance: The insurance that is necessary to rent the property.
Legals/Closing Cost: The fee paid to lawyers/conveyancers. This expense comes to picture only at the time of purchasing the property. It is not a yearly expense. Hence there is a variable ‘x’ in column C.
Management Fees: The percentage of the rental income that is paid towards managing the property. This is the fee that the property manager charges.
Misc Expenses: Any miscellaneous expenses that you may incur, for a year.
Owners Corporation: Charges paid towards maintenance of common lights, parking lot, common lifts, garden, reception area etc, to the owners’ corporation, by every apartment owner.
Other Expenses: Any other expenses.
Repairs And Maintenance: Charges paid for any repairs and maintenance of the property.
Utilities: Charges paid for utilities such as sewer charges, that are connected to the property.
Esc. Rate>> - The percentage of increase, per year, that will be applicable for all the above-mentioned expenses. For example, if you are paying $1,100, for accounting, today, then it might be increased by 5% or 7% the next year, and it might be increased by another 5% or 7% the following year. This increase in expense is the escalation rate.
Capital Improvements: Money spent on improving your investment property, like installation of solar panels. If you have not done any such improvements, then leave this field blank.
2. Enter the required values for all the fields and click Update All on the sidebar.
All the values will be calculated and displayed.