Which expenses are considered variable in real estate management?

In real estate management, variable expenses are those that fluctuate in relation to the property's income or operational levels. Occupancy-related costs are considered variable because they typically change based on the level of tenant occupancy and the usage of the property. For instance, as more tenants occupy a property, costs such as utilities, maintenance, and certain management fees may increase accordingly. These expenses directly correlate with how many units are occupied or how often the property is used, making them inherently variable.

In contrast, the other types of expenses presented, such as mortgage payments, insurance costs, and property taxes, are largely fixed in nature. Mortgage payments are typically consistent over the life of the loan, insurance costs usually remain stable unless there are significant changes in coverage, and property taxes are assessed based on the property value, which can also be predictable year over year. Thus, recognizing which expenses are variable is crucial in budgeting and planning for property management.