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Hi there, ,

There is a humorous story about Groucho Marx, the American comedian, radio, and television star. It seems he was extremely risk-averse and disliked speculation. It the mid-1920’s his fellow comics were continually bragging about how much money they were making speculating in the stock market. Week after week, he would hear their annoying boastings. Finally, he couldn’t stand it any longer. He took the plunge and invested his life savings. Not long afterward, in late October of 1929, the bottom fell out of the market. Thousands of investors lost everything, including Groucho. When a reporter caught up to Groucho and asked him how much he lost, he quipped, “I would have lost everything, but that’s all I had.”

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As investors, we know we must take special care in examining potential investments. Like Groucho, we should be averse to speculation if we wish to be successful. But Groucho showed what happens if we go along with the conventional thinking and jump on certain investments just because others seem to be doing it. It is up to us to do our due diligence on every potential purchase. With that in mind, I have detailed a number of possible income and expense items below - many of which we often fail to include in our analysis. That is because sellers are reluctant to include them. Some of them are not traditional and may unhappily surprise you once you have made your purchase if you didn’t sleuth them out beforehand.

Not all properties that you review will have every one of these individual categories. However, they are itemized here so you can be certain that you have included all of them in your property analysis. Missing even one item can make the difference between a profit and a loss in your investment. Make certain you thoroughly query the owner and the broker. There are often more expenses then you initially anticipate. So make certain you have accounted for them. As a reminder to you, place a checkmark next to each item that you encounter.

INCOME

Rental Income

Other Income:

o Utilities Reimbursed by Tenant

o Parking

o Storage

o Laundry

o Vending

o Furniture Rental

o Other:_____________________

   

EXPENSES

o Vacancy Allowance

o Taxes

o Hazard Insurance

o Umbrella Policy

o Management

o Supplies

o Licenses & C of O’s

o Trash Removal

Exterior

o Lawn Maintenance

o Snow Removal

o Gutter Cleaning

o Pool Maintenance

Utilities

o Gas

o Oil

o Electric

o Water

o Sewer

o Telephone

o WiFi/Cable

Professional Fees

o Accountant

o Attorney

o Court Costs

o Other _________

o Security System

o HOA Dues

o Assessments

o Travel

Leasing Expense

o Advertising

o Commissions

Maintenance & Repairs

o Painting

o Plumbing

o Electric

o Carpentry

I hope you will find this information useful. If you can't use it now, I suggest printing it out saving for when you are looking at a future property performance. I have always found this information helpful in my due diligence.

Have you ever run into an odd income or expense item before? If so what was it?

I look forward to seeing you next week with some more helpful investment information you can use. Please let me know if you have a special topic that you would like me to cover in a newsletter. I would be happy to do so. Contact me at: robertgilljr.com

Best regards,
Robert Gill, Jr.
Robert Gill, Jr.
robertgilljr.com

18 Bank Street Suite 1, Summit
NJ 07901 United States

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