Property Purchase Costs
Down Payment: Typically 10-20% of the property price.
Monthly Installments: For mortgage payments, calculate interest and repayment periods clearly.
Transfer Fees: About 2% of the appraised value.
Mortgage Registration Fee: 1% of the mortgage amount (if financed).
Specific Business Tax: 3.3% of the sale price (if held for less than 5 years).
Stamp Duty: 0.5% of the purchase price.
Renovation and Decoration Costs
Repairs for Damaged Parts: Such as electrical systems, plumbing, and roof leaks.
Repainting: Both interior and exterior to enhance appearance and value.
Furniture and Decor: Beds, wardrobes, sofas, tables, chairs.
Appliances: Air conditioners, TVs, refrigerators, washing machines.
Regular Expenses
Common Area Fees: For condos, calculated monthly or annually.
Property Insurance: Protect against damage from fire, floods, etc.
Land and Building Tax: Calculated based on property value.
Utilities: Water, electricity, internet (if included in rent).
Management Costs
Advertising for Tenants: Such as online listings and print media.
Cleaning Between Tenants: Deep cleaning when tenants change.
Property Manager Fees: Typically 5-10% of rental income.
Emergency Repair Fund
Reserve: Around 5-10% of annual rental income.
Coverage: Unexpected repairs such as appliance breakdowns, pipe leaks.
Vacancy Period Expenses
Basic Utilities: To maintain property condition.
Property Maintenance: Cleaning and garden upkeep.
Rental Income Tax
Income Tax: Rental income must be reported annually.
Deductions: Allowed expenses can be deducted as per law.
Property Depreciation
Depreciation: Though not an actual expense, it affects return calculations.
Rates: Buildings depreciate at 5% per year, furniture at 20% per year.
Additional Recommendations
- Careful Financial Planning: Calculate all expenses and estimate income.
- Reserve Funds: At least 3-6 months of total expenses.
- Comprehensive Insurance: Consider fire and flood insurance.
- Legal Knowledge: Study relevant laws, such as the Building Control Act and related tax laws.
- Market Monitoring: Regularly follow real estate market conditions and rental rates in the area.
- Professional Services: Consider hiring brokers or professional property management companies.
- Long-term Property Improvement Plans: Maintain value and appeal.