Identify All Acquisition Costs Before Buying

[Denise Evans]

For cash-on-cash evaluation of rental properties, it is critical to identify ALL of  your acquisition costs.  Here is a checklist. You might have additional items depending on your market.

1.  Cash portion of purchase price (of course!)

2.  Loan-related fees and expenses

3.  Buyer-paid real estate agent commission (Yes, I recommend buyers have their own buyer's agents. Well worth the money, plus you will have already factored that expense in to your cash-on-cash requirements to justify a purchase decision)

4. Closing costs, including recording fees, transfer taxes and HOA transfer fees, if any

5.  Title insurance, if paid by Buyer

6.  Legal fees, if any

7.  Inspections--house, termite, possibly separate roof and structural

8.  Property manager onboarding fee

9.  Home warranty

10.  Termite protection installation fee

11.  Out-of-pocket capital improvements and repairs anticipated during the first year

12.  Holding costs if renovation will be required (interest, builder's risk insurance, permits, porta-potties, lender draw request and/or inspection fees, etc.)