Costs to Consider When Purchasing Rental Property

Written by Sapphire of the Savvy Women Group,

Monday 9AM BST [August 18, 2021]

The process of searching for an investment rental property can be exciting; however, before you get too ecstatic, it is important to run some preliminary numbers to make sure you know exactly what you are facing to ensure a successful investment.

For many property investors, rental investments are a means to creating a secure and financially abundant life. Picture yourself and your family being set for life because of the smart choices you made.

At Savvy Women Group we have been investing in property for years. With my knowledge and experience in getting the job done; I can guide you towards making sure you have covered your bases when it comes to prospective costs, so please enjoy reading.

First, you need to carefully examine potential rental income.

Has the property already served as a rental property? You need to take the time to find out how much the property has rented for in the past and then do some research to determine whether that amount is on the right level or not.

In some cases, properties may have rented for lower than they should have while in other cases a property may be over-rented.

Look at comparables in the area to make sure you know whether the property in question is at the right level; otherwise, you may find that the amount you think you will be receiving in rental income is unlikely.

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Mortgage interest is another area that should be considered carefully. Make sure you know and understand prevailing interest rates as well as the details of your specific loan, because mortgage interest is the biggest cost you will face when purchasing investment property.

Need to know more about different Mortgage options? We have included a helpful FREE resource guide to break down these options, check it out here.

Many homes and duplexes tend to have loan structures that are like any mortgage loan, however larger properties rates tend to be higher.

If you are interested in or looking at or investing in commercial properties with even more units; the matter of terms and rates is completely different. Typically, the more money you can put down on the purchase of the property, the less interest you will have to pay.


Many people use the taxes from the year in which the property was purchased to assume they can use these figures to estimate expenses.

This is not always the case because taxes do not remain the same; they frequently change every year. Generally, taxes go up after a property is purchased.

This is especially true if the property was previously owner occupied. So, it is typically a good idea to just assume that the taxes will go up on the property after you purchase it.

Have realistic expectations for the times when your property is vacant and consider the costs this will incur. While you would certainly hope that your property would remain rented all the time, this simply is not realistic. Generally, you should assume that your property will have an average 10% vacancy rate.

The cost of tenant turnover should also be taken into consideration. This is often a big surprise to many landlords who assume they will rent out their properties and their tenants will remain in the property for some time. Even more of a surprise is how much it costs to prepare the property to rent out again. Just a few of the costs include advertising for a new tenant, repainting, cleaning, etc. If there are internal damage to the property, the total cost of repairing this may not be fully covered by the security deposit.

*Understanding your tax rules is crucial to becoming successful when purchasing a rental property, it can cost your business thousands if done incorrectly. Investing in the right guidance is highly advised, for an all-intensive course that ensures you’ll learn how to pay the right amount whilst making as much money as you can, click here*.

The cost of insurance should also be taken into consideration. Keep in mind that the insurance for investment properties is generally higher than an owner-occupied property.

Make sure you obtain a quote rather than just using the insurance cost for your own home as an estimating guide. In addition, make sure you take into consideration not only property insurance but also liability insurance as well.

Utility costs

If the property has already served as a rental property make sure you find out exactly what the owner pays for and what the renters pay for. You should also make sure to find out whether you will be responsible for other costs such as trash collection.

Finally, take into consideration the costs of property management if you will not be managing the property yourself.

There may be many questions and caveats in your knowledge of the property market, and that’s where we come in. Now available: TheSavvyPackage, we have taken to time to clearly outline costs, legal compliances, pension building, HMO investments, leasing options, free resources and so much more. For this invaluable package please click here.

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From Savvy Sapphire and Team, good luck!

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