In this episode, Jessilyn and Brian Persson break down the often-overlooked expenses of property ownership that can make or break your investment success. From mortgage and closing costs to property taxes, insurance, and maintenance, they explain why budgeting beyond the purchase price is essential. They share real-life stories of costly surprises—like a $50,000 foundation repair—and highlight the importance of thorough inspections, realistic rental projections, and effective property management.

The Perssons also discuss strategies for maximizing profitability, including setting rent based on market conditions, planning for vacancy costs, and accounting for property management fees—even if you self-manage. They emphasize that underestimating these expenses can lead to financial strain, but with proper planning, real estate can be a powerful wealth-building tool. Tune in to learn more about the common misconceptions about ownership and set yourself up for long-term success!

Resources discussed in this episode:

• The 3 Mistakes that Keep High Achieving Couples from Building their Wealth, Freedom & Living a Life they Love

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Contact Jessilyn and Brian Persson | Discover Life By Design:

• Website: DiscoverLifeByDesign.ca
• Instagram: DiscoverLifeByDesign
• Facebook: Discover Life By Design
• Linkedin: Discover Life By Design

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Transcript

Jessilyn Persson: [00:00:08] Welcome to the Life by Design podcast. We are your hosts Jessilyn and Brian Persson. Are you and your partner looking to align your financial goals and build wealth together? Have you ever wondered what might be stopping you from confidently investing in real estate or growing your wealth as a couple? Or why it feels so hard to get on the same page financially?

Brian Persson: [00:00:27] That's exactly why we created this podcast and the 'Riches, Relationships, and Real Estate' program to help couples like you invest confidently and achieve both your financial and relationship goals. Curious to learn more? Visit discoverlifebydesign.ca to book your discovery call and build your customized wealth strategy plan with us. Let's create the life you deserve together.

Jessilyn Persson: [00:00:49] Today's topic, we're going to be talking about underestimating the true cost of ownership. Many first-time investors focus solely on the purchase price only to be blindsided by a host of hidden expenses. So we're going to talk through some of what those expenses are so you can avoid these when you decide to buy your real estate.

Brian Persson: [00:01:09] I can't count the number of times I've been in a conference and meeting people who are investing in their first or second property, and they are still missing things in the budget. We'll talk about what those things are, but effectively, their real estate portfolio is underperforming because it's not really calculated properly.

Jessilyn Persson: [00:01:33] Yes, that is so true. We're going to roll right into the takeaways. The first one is that hidden costs add up. Know what to watch for. I know many of us are familiar, when we want to buy real estate, that we have to figure out what the mortgage is going to be, and to have that you need a down payment. Then there are usually closing costs, which we know of course are legal, but there are a lot of costs which we learned as we were buying, such as appraisal fees, if needed, inspection fees. We're fortunate not to have this here in Alberta yet, at least if ever, but our partners in Toronto have major land transfer fees. And of course, once you have your property, there are things like property taxes, insurance, vacancy periods, the list just goes on.

Brian Persson: [00:02:16] Goes on and on. Land transfer fees, Alberta is the only province in Canada that does not have them, so come buy in Alberta. A lot of people don't calculate what you just mentioned. They, like you said, are looking at the purchase price. Even when they're looking at the purchase price, all they're really looking to do is find a deal that's cheaper than the one next to it. Then all of a sudden their legal, appraisal, everything else that has to come into the picture, makes the property pretty well the same price. Especially if you have unexpected stuff. For example, your inspection takes more time because there's more issues, like a crack in the basement. All these things start to add up and you end up not saving any money by trying to be cheap on the buy.

Jessilyn Persson: [00:03:07] I would highly recommend to always have an inspection done. They can save you thousands of dollars by finding hidden things, which homeowners do hide. They can be incredible costs. Like you said, a crack in the basement, a crack in the foundation essentially could cost you upwards of $50,000 or more if you have to get that foundation replaced. $50,000, if you can catch it in the inspection, you have a choice to decline buying that property if it's just not going to work for you, or now you've got a large negotiating tool with the sellers. To be like, I need you to reduce the cost of the foundation fix. Then your buy will be cheaper so that in the end, even if you do decide to buy it and fix the foundation issue, your purchase price is still going to be the same because you got it back from the buyer before you bought it.

Brian Persson: [00:04:05] I can tell a story that has some good stuff and some bad stuff in it. When it comes to inspections, we use one of the top real estate investment focused inspectors here in our area. He came in and inspected one of the properties that we were purchasing, this was years ago. He was running his little camera down the pipe to see what was going on in the sewer lines. He came to this one point and he saw this little divot in the pipe, and he turned around and said, you haven't put this property under contract yet, have you? I was like, oh crap. Because we had already put it under contract and we were just going through our diligence. We knew the builder and we knew he did good work, so we weren't too terribly worried. But this problem was not in the building itself, it was actually out into the sewer line. Sure enough, this guy who warned me about maybe not purchasing this property, he was somewhat right in the fact that I have to have that sewer line augured every single year, and it cost me $300. But also, the property ended up being a total gem. We far made our money back on it, but I did have to spend extra time and costs in order to just keep that property maintained because of that little divot in that pipe that our inspector saw for us. Super important to have a really good inspector. You might not like the cost of a good inspector, because this guy that I'm talking about he's quite expensive, but he will find everything for you in that property.

Jessilyn Persson: [00:05:43] Honestly, a few grand up front, I think in general, is the high end of a good inspector, but that is so worth your investment.

Brian Persson: [00:05:53] Not only that, he will come back with an investor-focused laundry list of deficiencies with that property, which you can then go back to the buyer and negotiate with. It is a hidden cost that the inspect...