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OTHER INCOME OPPORTUNITIES
Most properties have other income opportunities. These should also be factored into
your budget. The most common examples of other income budget items include the
following:
• Laundry income.
• Parking income.
• Water and sewer income.
• Late fees.
• Nonsufficient funds fees.
• Cable income.
• Internet revenue.
• Telephone income.
From the operating statements and individual ledger cards for each resident you should
get an idea of what other types of income exist at the property. After all, somebody has to
deposit this money into the bank account, so there is a paper trail somewhere.
Sometimes this information is difficult to get from the seller. Not everyone is a good
bookkeeper. If this is the case with the property you are buying, you will need to re-create
the records from the facts you do know. For example, if there is a laundry room with coinoperated
washers and dryers and you do not see the laundry income on the seller’s income
and expense statements, you will need to go directly to the company that services the
machines and collects the coins to find out how much you should expect on a monthly
basis.
Finding the other income sources can take some time. Kim Kiyosaki just told me
recently that she was buying a property from a seller whose books showed that for over four
years the laundry company had not paid anything to the sellers. The washers and dryers
were there. People were using them. You can bet this detail was flushed out during due
diligence and a realistic income number was entered into an operating budget before Kim
bought the property.
This is the process of uncovering and entering onto a spreadsheet your income
opportunities. Each opportunity should have its own line. Once you have exhausted all the
existing income opportunities, you enter lines for any new income opportunities you may
add once you take over the property. With income out of the way, you do just as we did
before when we were valuing the property, you turn to the expenses.
Expenses
Just as you created a new line for each income opportunity for your property, you’ll
create a new line item in your spreadsheet for each expense. In the sections that follow, I’ll
list and describe most of the most typical expenses you will encounter with your new
property.
PAYROLL
Payroll covers the salaries and wages you pay yourself or your staff. A typical
management staff, depending on the size of the property, can include several people. First