Increase income, decrease expenses. This is the simplest form of real estate analysis from an investment perspective.

Income is function of location, market supply & demand, property improvements, competing rents, lease structures & a multitude of other factors.

Property expenses vary widely across property types and even geographically. For example, north of the Sunbelt snow removal is an expense, whereas properties in southern areas are subject to higher electric bills in the summer months. The largest property expenses owner’s face are property taxes, insurance, property management fees, leasing fees, lawn care, janitorial services, waste removal, tenant improvements, repairs & maintenance, advertising costs, vacancies, attorney fees, etc.

Property Taxes – In some areas, property taxes can be appealed in order to lower the owner’s tax burden. We suggest consulting a professional appeal service as it could save you a significant amount of money and the service usually just takes a percentage of the saved expense.

Insurance – Insurance is a function of many factors: the properties’ age, possibility &/or likelihood of potential natural disaster. Ex- Florida properties are threatened annually by hurricanes, significantly increasingly the cost of property casualty insurance. Buildings & homes with new roofs, concrete construction & hurricane shutters benefit from discounts offered.

Property Management Fees – Many large property owners including multifamily groups, office/commercial complex owners opt to pay a monthly percentage of revenue to a management company in exchange for property management services. Typically, a property manager will arrange for all of the upkeep & maintenance responsibilities, while collecting rents and taking care of tenant maintenance requests. Nearly all professional investors factor in property management fees when underwriting real estate deals and building their 5-10 year pro forma projections.

Leasing Fees – Whether a single residence or a large commercial real estate project, it often makes sense for a property owner to outsource the leasing of their investment. Leasing agents connect available space with tenants who are moving or relocating within the area.