EP165: Case Study: Start Up Costs for Buying Your First Rental Property
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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? On today’s show, I’m sharing five start up costs that are associated with real estate investing.
On this episode, I’ll discuss exactly what costs you should expect to incur when you’re starting your real estate business. I’ll talk about setting up your business entity, closing on your investment property, and more! It’s all here on episode 165 of Investing in Real Estate!
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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.
- 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.
- 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.
- 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.
- 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.
- 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.
If you’re ready to begin building a passive income through rental real estate, book a FREE call with our team today. We’re ready to talk about your goals and want to help you learn more about earning legacy wealth for you and your family.
On this episode you’ll learn:
- Which states are the most expensive for setting up business entities?
- What information do you need to set up a business checking account?
- Where can you get your EIN number?
- How do you acquire a landlord license, if necessary?
- And much more!
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