A recent headline on Foxbusiness.com declared, “Homeowners Can Spend Over $9K a Year in Hidden Costs.”* This applies to first time home buyers as well as those living in their retirement homes but it also can apply to real estate investors. $9,000 is a lot of money and in all likelihood eliminate muchDon't throw away $9K per year if not all of the gains from rental income, causing cash flow to reverse course.

Companies who specialize in identifying and rehabilitating real estate for acquisition and long term appreciation go through more analysis than most real estate buyers do, but the article does make sense and something we’ve talked about before here.

Most of the hidden costs referred to in the piece talk about property taxes and insurance. Besides the principal and interest payment, taxes and insurance directly affect cash flow. If you can get those lower, your cash flow improves. Each year the local taxing authority sends out property tax bills. These tax bills are rarely the result of an onsite, physical appraisal of a property but instead compare the subject property with the cost per square foot with other recent sales in the area. Issues that can keep a lid on property taxes means highlighting your discoveries in an appraisal appeal. You can do this yourself but it’s best if you hire a licensed property appraiser to give a current value. There are also companies that specialize in appraisal appeals and are only paid a portion of the amount of taxes saved.

Homeowners insurance can also be adjusted based upon a variety of factors. Newer homes have interior fire suppression systems installed but if your properties are older, simply installing new smoke detectors and strategically placed fire extinguishers can make a difference. Again, you can do this on your own but it’s best to have your insurance agent do the heavy lifting, then provide you with how much money you can save without negatively affecting your coverage.

*Fox Business News, Christine DiGangi, June 22, 2015