Overlooked costs of renting a unit

[Matt J.]

Hello everyone,

We all have methods for estimating operating costs when looking at a deal and mine tend to be fairly conservative. After chatting with several other investors recently, I've found many do not account for some property management and turn-over costs I believe to be inevitable. These are costs beyond the monthly percentage of gross rents. Many of these items erode my cash flow when considering a deal. I'm curious to know your actual experience with these things:

1. Tenant placement costs - What does your PM charge to find and place a new tenant in your area?
2. Lease renewal fees - Does your PM charge you a fee to renew existing leases? If so, how much?
3. Mark-up fee - For items beyond the basic maintenance, how much does your PM charge to process bills?
4. Unit turn-over costs - How much does it cost to turn over a unit between tenants?

There are many other items, but these seem to be the most overlooked and they can quickly sour an otherwise good looking deal. If nothing else, this discussion may help some of the newer folks form more realistic expectations.

Thanks in advance for your insight!