5 Start Up Costs for Real Estate Investors

We’ve discussed the regular expenses you should account for as a real estate investor, but what should you expect when you’re just getting started? There are a few start up costs you will incur when you begin investing in real estate.

The types of properties that we provide at Morris Invest are single-family homes in the Midwest. These properties are typically in the $40-50k range. For this kind of investment, there are a few costs you should expect when you’re getting started.

  1. Setting up your business entity. Typically, this will be an LLC. There are a few ways to do this, but I typically recommend going right to the source—the department of state website where your property is located. In some states, you may need to use an attorney. To set up an LLC, you should expect to pay anywhere from $100-300.
  2. Insurance on your rental property. This amount can vary, as it depends on your location and coverage. Typically, I pay anywhere from $400-600 per year for rental coverage and liability insurance.
  3. Setting up a business checking account. You’ll need to have a business checking account to collect rent every month. Some banks charge a monthly service fee as well as minimum opening deposit. Local banks may have free accounts, so shop around.
  4. Closing costs. When you purchase your rental property, the title company will charge fees. A good rule of thumb is anywhere from $300-500. This amount accounts for running a title search and recording the deed.
  5. Landlord license. This cost is not applicable in every state, but some states do require a landlord license. If your property is located in a state that requires a landlord license, you can expect to pay $100-150 on a yearly basis.
We’ve discussed the regular expenses you should account for as a real estate investor, but what should you expect when you’re just getting started? There are a few start up costs you will incur when you begin investing in real estate.