Investment properties are designed to be income properties. But whether you have a rental house, apartment, or office building, you will have annual expenses involved with your real estate investment. These include property taxes, mortgage payments, development and maintenance fees as well as income taxes.
Property taxes are paid semi-annually to the county tax recorder's office in the county where the property is located. Each state and county determines the rate for property taxes, often based on the fair market value of the property plus any upgrades made. Failure to pay property taxes can result in a tax lien and possibly loss of property to a county auction.
If you have a mortgage on the property, you are paying your monthly mortgage payment plus interest. Paying the mortgage down faster will reduce the amount of interest owed over the course of the mortgage, reducing your overall cash outlay on the property.
It is imperative to maintain the property both functionally and aesthetically to get the highest return on investment in rental and lease dollars. This includes plumbing, roof, flooring, and electrical maintenance. Painting and landscaping are also important in maintaining the value of the property. Maintenance fees are considered standard real estate investment expenses.
Remember that the money coming in is income and will generate a taxable event. Consult a tax advisor about what expenses are deductible against the income earned on the property.