efore purchasing an rental.
investment property for
rental purposes it's always Agents Fees - in some countries
a good idea to calculate whether it is common practice for the
it will be cash flow positive or buyer to pay some or all of the
cash flow negative. That is, will real estate agent's selling
the property generate an income fees/commission. However, in most
(positive) or will it require a cases these fees are paid by the
monthly cash injection vendor.
(negative)?
Stamp duty - a duty placed on the
This article will outline and purchase of a property charged by
briefly describe many of the main the local government for the
Purchasing and Annual Holding registration of the property into
Costs incurred when buying a the new owner's name.
rental property. Please keep in
mind that these items will vary Mortgage Application Fees -
from country to country and they charged by lenders upon
do not take into account personal application to secure a loan to
tax implications. buy the property.
- Purchasing Costs Travel Expenses - flights, car
hire, and hotel costs incurred
Purchase price - the agreed price when travelling to personally
for which the property will inspect a property.
exchange hands.
Solicitors Fees - payable to the
Renovation Costs - money budgeted solicitor for all of the relevant
for renovations prior to the legal work for the transfer of
property been made available for the property.
Research - books, local suburban - Annual Holding Costs
reports purchased to research a
suburb. Mortgage Repayment - payable to
the mortgage lender to repay the
Accountants Fees - the property loan used to purchase the
may be purchased in the name of a property.
Trust or Company. There may also
be a crossover here with the Property Management Fees - if a
solicitor's fees. professional property manager is
appointed they will either charge
Council Rates Cutover - A vendor a percentage of rent or a monthly
may have paid rates up to a time flat fee.
after the transfer of the
property. The amount is then Council/Municipal Rates - charged
split between the buyer and for collection of waste and
vendor on a pro-rata basis. upkeep of local services.
Sometimes these are paid by the
Independent valuation / Engineers tenant.
Report - a vendor may choose to
pay for their own independent Maintenance - costs for repairs
valuation or engineers report to and maintenance on the property
highlight areas of concern. and it's fixtures and fittings.
Miscellaneous - this will include Bank Fees - account keeping fees
postage, telephone calls etc. charged by the bank.
It's also worthwhile to include a
contingency should some of the Landlord Insurance - protection
above costs be more than against theft, damage,
anticipated. non-payment of rent, legal costs.
structures if a property is owned
by a Trusts or Company.
Letting Fees - some property
managers may charge a letting fee Miscellaneous - again, this will
for finding new tenants. include a contingency should some
of the above costs be more than
Pest Control - protection against anticipated.
pests and termites.
Once all of these costs have been
Cleaning - the property may factored into your calculations
require a thorough professional you will be able to determine
clean in preparation for new whether a property will be cash
tenants. flow positive or not.
Travel Expenses - incurred when Visit
visiting the property at times http://www.bulgarianpropertybuyer
such as showing it to potential .co.uk/freetrial.htm to download
tenants or collecting rent. your free "Estimated Returns
Calculator" which allows you to
Local Income Tax - may be charged quickly calculate the net return
by some local governments for the on a potential investment
rental profits after any property.
allowable deductions.
In closing, it is imperative that
Land Tax - an annual tax on the you seek professional legal
value of the land on which the advice before you make any
rental property is built. investment. This will clarify the
process according to your own
Accountants Fees - payable for personal situation and the county
the administration of legal you are investing in.
Happy investing!
About the Author:
Tim Wright is an international property investor and regular article contributor. He is the author of "Bulgarian Property - The Overseas Buyers' Kit" available at http://www.bulgarianpropertybuyer.co.uk
Source: www.isnare.com
