It is imperative to know that your property is healthy.Trevor Conklin, you will need to factor in other costs such as insurance, water and management fees. 

Then, from the remainder I subtract mortgage, tax, and insurance.

With that said - you may want to discuss entity vs insurance protection with your attorney to see which route covers your concerns and overall costs.

If I buy a house in January, spend 6 months rehabbing it, and then rent it out in July, do the holding costs during the first 6 months (prorated property tax, mortgage interest, insurance, utilities, etc) get deducted from rental income, or do they get added to the basis of the property?

There were some last-minute issues with the title but our RE attorney was great and resolved the issue in time for the early closing.Yesterday on the 3rd, I went to sign the paperwork with the property insurance agency at which time I was told they put the wrong address on the quote and after making the correction the premium went from $2,600 to $3,900 annually.

The major categories are taxes, insurance and your loan payments.

What about property tax and insurance?

I'm thinking something like electric not done properly and starts a fire, insurance won't pay??

I look up taxes and insurance. 

Or you might not be able to get earthquake insurance in some areas for example.