Home Investments Expenses that need to be Considered When Investing in your First Property

Expenses that need to be Considered When Investing in your First Property

by My Journey to Millions

Investing in a property for the first time is a really exciting occasion. As well as all of the excitement of getting your own house or apartment, though, you also need to think about the practicalities of buying somewhere for yourself. For instance, what about the expenses of owning a property? Read on to find out more.


If you are buying a property, unless you are able to buy it outright, you’ll more than likely have to pay a mortgage. For most people, this is their biggest monthly expenditure so you need to make sure you’ve taken it into consideration in your budget.

Property taxes

Your level of property tax will depend on where you live and the value of the house you are living in. Generally speaking, this means that if you and your neighbor live in houses of roughly the same size, you should be paying the same level of property tax. These taxes are one of the main ways state and local programs are funded, so it’s an important expense to remember.

Energy bills

As well as paying your monthly mortgage, you also need to remember to budget for your energy use. This includes things such as your electricity, gas and water. It’s worth shopping around for the best deals on your energy as different providers offer different rates. You might find that it’s cheaper to bundle your gas and electricity together as part of a package, for instance, while other providers might offer you a good value fixed rate.


Anyone who buys a property needs to have home insurance. The only exception to this is if you’re renting, in which case your landlord should take care of this so you’ll only need to get contents insurance. If you’re investing in a property, though, you will need to get contents insurance for your possessions and buildings insurance for the property itself. This will cover you for things such as theft, fire and other damage. Make sure you read your insurance policy to check it contains everything you need, and use comparison sites to check out the different deals on offer.

TV and internet

These are strictly necessary expenses so you could do without them if you wanted, but most people these days do have a TV package and, more often than not, the internet. One option is to buy these separately, but some providers will bundle together TV, internet and phone, which can help you save money.

Fees and costs

Don’t forget, either, that when you’re investing in a property there is likely to be some initial expenses you need to take care of. This could be realtor fees or the cost of hiring a lawyer to complete the property transaction. One-off costs such as home renovations and improvements may also need to be factored in.

Running costs

Finally, don’t forget your running costs. This means things like food expenses and the cost of commuting. It can be a good idea to write a list of all your expenditure when investing in a property for the first time, as this will give you a better idea of what’s necessary and what you might be able to do without in order to keep your costs down.

Guest Post by James

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UltimateSmartMoney 12/17/2011 - 7:07 pm

Regarding the energy bill, many first time home buyers do not think about potential increase in their energy bill after they move in. Because most buy homes as an upgrade from their existing home, the size of the house will most likely be much larger, which means more energy is required to heat and cool the place. Also, don’t forget about HOA fees as it can be as large as $1500 per year in some areas.

Simon 12/18/2011 - 10:42 pm

Don’t forget home inspection prior to putting in an offer!

20's Finances 12/19/2011 - 8:09 am

Nice list – property taxes are often overlooked in what you can afford. I’m not sure I would include TV as my wife and I don’t have cable, but to each their own.

Sunil 12/19/2011 - 10:49 am

good post. yes to inspection fees.

i use cost of living calculators when contemplating buying rental properties in various jurisdictions.

problem is that i still don’t know which calc has the most up to date data at any given time. they all vary – if anyone has thoughts on the most reliable and accurate i’d love to hear?

Amanda L Grossman 12/19/2011 - 5:50 pm

And things like Association Fees! Ours is $450 a year.

Funny about Money 12/21/2011 - 10:39 am

Nice post. I thought at first you were talking about investing in rental property, rather than buying your own dwelling. In the former case, all these apply and then some.

Watch for trade-offs with certain HOA properties. For example, recently I saw a nice house in a killer location. Total land lease and HOA (land lease…something else to watch for!) payments would come to something over $900/month.

At first I thought {gulp!!}.

But then realized I’m spending more than that on routine costs for my comparably sized and built house (adjacent to a neighborhood most kindly called “sketchy”). The HOA includes all exterior maintenance including repair and replacement of roofs, all water bills, and insurance on the structure. All repair bills INCLUDING THE PLUMBING AND ELECTRIC (!!!) are also included. Because the development is on lease land, taxes are negligible–although of course residents are paying the landowner’s taxes out of their fees.

Well. In the summer my water bills are over $200 a month, and I don’t have grass. This place has spectacular green grounds–it’s like the homes were built in a park. It has a 24-hour living, breathing gate guard. Two security guards patrol the property at night. It has a social director (can you imagine?) and it offers free van services to major shopping venues. There’s a gourmet restaurant on the property (no steam table food there), and it’s across the street from shopping, restaurants, and movie theaters.

In other words, for what it costs to live in my present home, I could have the same house in a much nicer neighborhood, with much reduced concern about crime, with a staff of people to wait on me, and with a whole slew of expensive extraneous costs (roof repair, painting, major landscaping repair and replacement, grass disease treatment, plumbing repairs) covered in my monthly bill.

Most HOA fees don’t cover all that. But they may cover some expensive items that you would otherwise have to pay out of pocket, such as exterior maintenance, water for landscaping, exterior paint jobs, and a large share of the insurance.

JP 12/21/2011 - 8:27 pm

Could include regular upkeep and the added time required to it. Minor things like mowing the lawn, gardening, etc. all are new and cost time and money.

Jai Catalano 12/28/2011 - 11:58 am

When I bought my house in 03 there was a tax abatement for 5 years. Now the government is making up for being so kind. It’s a real game they play with my property taxes.

TMM 04/22/2012 - 2:23 am

There are so many costs that we tend to miss when we go ahead and buy a property. Indeed if we miss even one of these important costs mentioned in this article, we might end up looking at the gaping hole in our carefully planned budget.


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