PITI is your go to formula for finding your expenses to own a property as a rental or a primary residence. We've gone over (PI) principal and interest but now we will dive into (TI) taxes and insurance.
Property taxes can vary in costs depending on your the state and county. Your county assessors website will have accurate information on your current taxes and how to find them out. They can change every few years when the property gets reassessed. This can also be rolled into your principal and interest payment to only have one monthly payment for all three. Colorado taxes can range from $1,000-$2,000 a year. Texas taxes can vary from $4,000-$6,000 a year. This is important to know when you begin investing in real estate as certain states may be better options for you.
Insurance is a separate cost through an insurance company, You will need to give them a call and get a quote for your property. In Colorado I've seen costs go for $200 a year for a two bed two bath condo to $2,000 for a three unit multi family property. There are many things that go into the price. So it's best to contact an insurance agency for a quote. If you're thinking insurance on your home is not needed, you should think again. All types of weather damage to a home can be a hefty cost with out property insurance and you never know when mother nature will catch you off guard.
Your Home Owners Association (HOA) dues are the last thing to consider. This is a monthly payment that can include anything from yard maintenance, snow removal, trash and even some utilities. If this isn't paid through out the year and you go to sell the property, the HOA can actually hold a lien on the property to make sure they get paid the amount you owe before you get cash yourself.
Principal + Interest + Taxes + Insurance + HOA = Fixed cost to own property
Variable cost for a property are your water, electrical, and gas bills.
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