Are you buying your first rental property? Well as a landlord who bought over 80 rental property in our career, we want to uncover the HIDDEN Start-Up costs to avoid when buying your first rental property! These are some of the costs we wished we knew before we bought our first rental property and we want to help you AVOID these costly mistakes so that you have a better shot at becoming a successful landlord and a real estate investor. The first hidden startup cost when buying first rental property is the tax cost spike. You may have done everything right when analyzing the deal but this is something new investors overlook when buying first rental property. When a new investor takes ownership of the property, the insurance cost doesn't always stay the same as the previous owner. When buying first rental property, insurance companies look at multiple variables from the new owner; credit score, previous insurance claims, how old your business is.......etc.
The second hidden startup cost when buying first rental property is lost security deposits. The seller should have all of the security deposits in an account where they can access it whether to give it back to the tenant upon them moving out or access it to repair the rental unit. MAKE SURE that when you are buying first rental property, you include that when sitting down at the closing table for the previous owner to give you the security deposits. You don't want to find yourself as a new property owner, having to fork over a bunch of cash because the previous owner didn't give you the security deposits.
ALSO, get a copy of the lease agreement before buying first rental property, to verify what the seller is saying is true about how much the actual rent is. The seller could be saying that the unit is going for $1000 per month and on the lease it says $800. To verify even further, ask the seller to provide a bank statement to prove how much rent they are actually collecting. What you are looking for is the consistency of the tenant paying monthly so you don't inherit a flakey tenant.
The third hidden startup cost when buying first rental property is the deferred maintenance cost from the previous owner. For many different reasons, the previous landlord could be pushing off maintenance problems. DON'T LET THIS HAPPEN when buying first rental property. Hire an inspector, you don't want to deal with major maintenance issues when you first start out.
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The Kwak Brothers are millennial real estate investors who have acquired over 82 Units of Rental Units and have raised over $20,000,000 of capital for their real estate deals. They are based out of the Chicago-land area and they are dedicated to helping hard-working people become financially free real estate investor! They specialize in owner financing acquisition and raising capital. They are the creator of the FORCE Strategy (Find the deal, Owner Finance It, Raise the Capital, Cashflow It, and Expand your Financial Freedom)
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---DISCLAIMER--- The suggestions, advice, and/or opinions that are given by Sam Kwak (The Kwak Brothers) are simply opinions. There are no guarantees of set outcomes. Listeners, guests, and attendees are advised to always consult with attorneys, accountants, and other licensed professionals when doing a real estate investment transaction. Listeners, guests, and attendees are to hold Sam Kwak, Novo Elite, Inc. and the Kwak Brothers brand harmless from any liabilities and claims. Not all deals will guarantee any profit or benefits. Listeners, guests, and attendees are to view and listen to all materials and contents furnished by the Kwak Brothers as a perspective based upon experience.
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