The investor advantage
Expense and Fee Breakdown
Gross rent is the easy number. Anybody can put it on a flyer. The decision is what is left after the house is insured, taxed, repaired, and actually run. This is that list.
The bills a brochure skips
I operate short-term and long-term rentals in Houston, so the sheet includes the bills that show up when a brochure leaves them off. An empty month. A lawn the tenant does not own. An HVAC call on a Saturday. Somebody answering a guest at night. You get to see whether the house still makes sense after those costs, and which use leaves you more room when the tax, the insurance, a vacancy, or a repair runs hot.
What comes off the rent
Every house has a version of this list. The dollar amounts change. The categories belong on the sheet.
- Property tax. New construction can be assessed differently in year two than in the builder's estimate for year one. Ask what the number is based on. That gap is part of the first year of a new house.
- Insurance, including whatever a short-term use or a landlord policy adds. A homeowner policy and a rental policy are different products. A rental is not insured like a home you live in.
- HOA dues, and any rental or transfer fees the association charges on top of the monthly due.
- Mortgage principal and interest, if you are financing. Principal is paydown. It sits apart from an operating cost, and the payment still has to clear.
- Repairs, turnover, and the bigger items that show up later: roof, HVAC, appliances, and a lawn the tenant does not own. An existing house has a record of which of those have already been done.
- Vacancy. An empty month is an expense even though no bill arrives in the mail. It belongs in the same column as the dues.
- Utilities and lawn care when you pay them. Short-term stays often leave power, water, internet, and supplies with the owner. A long-term lease can push some of those to the tenant. The model has to say which.
- Furniture, restocking, and platform fees if the plan is short-term. A vacant new house is guest-ready after it is furnished and listed. That cash is due before the first rent check. A nightly stay can owe tax a lease does not.
Management is its own line
Somebody has to answer the guest or the tenant, book the clean, and take the repair call. That can be you, or it can be a manager. If it is a manager, the fee is part of the cost of the rent. Put it on the sheet before you close.
Property management is separate from buying a house through me. If you want it after the purchase, it is its own service. Get the fee, what it covers, and what it leaves with you, in writing, before you subtract a round number from the rent in your head.
Buy what is left
I start from the income estimate, then subtract the categories above for a short-term case and a long-term case, and only for uses the restriction review still allows. A lease and a nightly calendar are two different jobs. You get a side-by-side you can actually compare. A promise of cash flow is a different piece of paper. The question with the scales we publish is what actually cash flows in Houston right now. If the only way the purchase works is a full calendar, no repairs, and no management, it does not work. The version of the sheet you want is the one that still stands after one bad month.
What ROI means here is this list subtracted from the rent. On a resale, gather it during the option period. The broker's fee is separate from these operating lines. Buyer representation can be free when the seller pays the broker commission. Appreciation is not cash flow, so a rising metro index does not pay this list. The sale that might turn a price change into money is the resale and exit strategies.
Let's talk while this is still an idea. I will walk you through what comes off the rent after the flyer number.