The income bucket from property refers to rent, utilities, laundry, parking, etc. In contrast, the expense bucket refers to the management company, maintenance, repairs, and capital expenditures to keep the property upgraded. Expenses also include taxes, mortgage, lawyer fees, and even pest control. These expenses need to be considered in determining if the property will produce a positive cash flow.
Therefore, you need to do a deep dive into due diligence. Ask the seller for a “rent roll.” This is essentially a list of the leases and actual rents that have been collected over the past year. Then, to calculate expenses, you’re going to want to see all the seller’s records, including maintenance and taxes.