How do I factor initial costs into the expenses of an investment property

[James McGuire]

Hi 

We are looking at purchasing our 2nd rehab to rent investment property of a 2Br/1Ba townhouse. We are using traditional financing 30 fixed with 25% down. The home is being priced at 150 and we expect to get 1350 in rent. This one will need an estimated 15k to remodel and fix a leak/mold issue. My question is when calculating the monthly free cash flow (rent minus expenses (Taxes, HOA, Ins, Maint and Rent Vacancy) how do I factor in the cost of the initial remodel expense? I don't think I should add it to the cost of the house since I am not financing the repairs but coming out of pocket for them. Should I divide the 15k into monthly payments but if so for how long? I hope this question makes sense.

[Jesse Waters]

@Rob BelandI disagree with you on this one, sorry.  Grated some items will be depreciated off, this case is buy and hold, so the cost of the repairs can't be passed on to an end buyer as it would be in a fix-n-flip.

The number I am always looking for is; what does a property cost me to get it rented & will my return be on my investment?  Up front out of pocket cost compared with positive cash flow.