Gainesville and Alachua County have been highlighted by numerous articles as a great place to buy rental property. With low interest rates and an active rental market, now is a great time to invest in a Gainesville rental property. Before buying, however, make sure to accurately estimate for the purchase and subsequent maintenance. In order to draw up your estimation of cost, you can follow these three steps to come to a more accurate estimate:
Accurate method
1. Calculate Fixed Expenses: These expenses are unavoidable no matter whether you have a tenant or not. Two large fixed expenses tend to be property taxes and monthly HOA fees.
2. Calculate Variable Expenses: These expenses are not predictable but can include maintenance and home improvement projects that can increase the property’s value such as a new roof or kitchen remodel. Vacancy is a variable expense most owners forget but there is likely going to be time during the year when your rental property will sit empty – and you are not collecting rent!
3. Add it all together: Take these expenses and add them together to figure out total cost of owning the home. Divided out over 12 month’s can give you an average of how much it will cost you monthly to own that rental property.
Quick Method
If you aren’t interested in calculating an accurate estimate and want the roughest overestimate, use this quick formula to calculate your expenses:
1. Figure out your anticipated monthly rent income.
2. Assume half of that income will go towards expenses (excluding mortgage payments). For example, with a property renting for $1,000, you assume you will spend about $500 in expenses and receive $500 in rental income.
Research is key to accurate estimation. If you need help understanding the rental market before you buy or even if you are currently trying to re-rent your current rental property, Secure Investments would be happy to share our knowledge and expertise to help you with the purchase. Our property manager Tanya Chappell has been managing property for more than 27 years and can complete a free rental evaluation on prospective or current properties to determine their market rental rate. Feel free to give us a call at 352-478-8029 if you would more information on the Gainesville rental market or more information about our services.
Thanks to Bigger Pockets for sharing this great information!