What are your startup and operating costs?

[Ludmila M.]

Hi everyone,

First, thank you to everyone for making this forum such a useful resource. This is my first post, but I was using BP for a while and learned a lot from all of you. 

About myself. I am starting my business of rehabbing and selling distressed SF homes in North Metro Atlanta. I spent years as an investment analyst for a commercial real estate investment and development company overseas.  I truly enjoyed working in real estate, and this passion is what brought me here today. I am currently not employed and plan to fully commit to real estate investing. My husband has a full-time job and is very supportive.

I will be a cash buyer (some savings + HELOC) and plan to rehab 1-3 properties in 2016.

We are currently trying to estimate our budget for overhead costs, and this is what prompted me to write here.  I was wondering if you could help with understanding all expenses involved in setting up and operating this business in the first year? I searched BP for this information but stopped after 30 min of unsuccessful digging. Here is what I have so far:

1. Tax accountant: $1,600 (annual retainer, or pay $250/hr - what would you recommend?)

2. Setting up LLC: $400

3. QuickBooks: $300 (I will do bookkeeping myself in 1st year)

4. Obtaining RE license: $574 (course $289, exam $117, license fee $170) + $3,600 "desk fee" to employing broker (I might wait with getting my RE license until Year 2)

5. Local REIA Membership: $100 (undecided about this one)

6. BP Pro Account: $290 (undecided about this one)

7. General Contractor's estimates for properties I would end up NOT buying: $50-100 per quote. I am referring here to situations when quotes on rehab will make me realize that this is not a good deal, yet I still have to pay the GC for his time. 

8. Home inspections for properties I will end up NOT buying: $450 each. 

9. Networking costs  - coffee/lunches/etc for people I would like to meet: $?

10. Fuel: $?

11. Attorneys, title companies, anyone else - is there any cost associated with these people in regard to properties that I investigate but don't buy? Also, if I plan to work with a realtor at least in the first year, would that eliminate the need for attorneys?

Anything else I am missing? As to marketing, books, office supplies -  I can make assumptions on those.

All in all, I can see that it can easily get to ~$10K in out-of-pocket overhead costs in the first year. Does this sound reasonable? I will appreciate any feedback. Many thanks in advance!

Ludmila