If you suck at something, be better.

I was in a fast food mood yesterday afternoon and I wanted a burger.  Decided to go through a drive thru, cause people like me don't waste time.  

So, there I was - waiting in the drive thru window while the lady behind the glass is sipping on a small cup of what appeared to be Orange Fanta.  The same drink I so happen to order for my meal.  Good stuff, I have a taste tester, sitting here plain as day partaking of the nectar for which I was also awaiting my own cup.

She politely handed me my meal, we both smiled - I drove off, unsuspecting..

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What are Real Estate Operating Expenses?

Real Estate operating expenses (OE) are the costs and fees that an owner incurs while maintaining an income producing property.  These costs are most directly related to the properties upkeep and maintenance, but can also be cost for services as well.  Listed below are some of the most common operating expenses for residential rental property.


Utilities (water, gas, electric)
Property Management
Marketing and Advertisement
Maintenance and Repairs
Supplies
Security
Salaries
Bookkeeping
Attorney Fees
Pest Control
Trash Removal/Disposal
Property Taxes
Travel Expenses
Vehicle Maintenance/Gas
Insurance
Snow/Water Removal
Legal Fees
Maid/Janitorial Services
Bank Charges/Fees

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What is Net Operating Income?

Net Operating Income or (NOI) is the gross operating income (GOI) of a property after the operating expenses (OI)  have been deducted, but before the income taxes and interest are deducted.

To explain this in more simple terms for you N00bs, it is the money you receive on a property minus all the expenses you have to pay - maintenance, marketing, management, repairs and supplies are examples of expenses you may incur.  Whatever is left over is the net or actual income that is realized.

Here’s the formula:

#1.  Determine the Gross Operating Income (GOI) = Gross Potential Income (GPI) – Vacancy

#2.  Determine the Operating Expenses (OE)

#3.  Subtract the OI from the GOI = NOI

Example:

 
Gross Operating Income (GOI)                 $64,300
Operating Expenses (OI)                    -    $43,500
                                                  ---------------------
Net Operating Income (NOI)                    $20,800

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We are Real Estate Pwners and Gamers 

Real Estate is the means by which we fund our interests.  Real Estate is not our job, nor is it our intent to have you make real estate your job, interest, or hobby.  

I say this because, although pwnhomes.com is a site that is written by gamers and for investors, it is essentially just a place to teach you the reader that your passions, interests and goals should not be set aside. 

Real Estate should be the catalyst that allows you to do what you want in life – plain and simple.

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Why Are Rent Homes 1500 Square Foot? 

Today, I was working on a turn over of a property and wanted to address something that many noob investors question - why rent homes are only 1500 sqft on average?  Well, there are many reasons but the first one that comes to mind is because of the time it takes to revamp a home into move-in condition.

For example - if you have a 2800 sqft house with 5 bedrooms and 3 baths, this can essentially be near equivalent to reletting 2 1400 sqft houses with 2-3 bedrooms and 1.5 baths a piece.  As you can see from this example alone, the time to revamp the 2800 sqft rental is just as time intensive and expensive as is revamping 2 smaller houses.

Additionally.  It has been proven that most families rent in the 700-1000.00 dollar range.  If you have a bread and butter 3 bedroom, 2 bath, 1500 sqft house, your probably going to be within this price range, however, if its 2500 sqft or more, your most likely outside the range of most renters.

So, next time your looking for investments - remember, bigger is not always better.

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