What are considered "variable expenses" in the context of real estate?

Variable expenses in the context of real estate refer to costs that can fluctuate based on factors such as occupancy levels, usage, and other operational conditions. These expenses often include items like utilities, maintenance, and property management fees, which can vary from month to month depending on how the property is utilized and the number of tenants occupying the space.

For instance, if a property has a higher occupancy rate, expenses for utilities and maintenance might increase because more people are using the facilities and there is a greater demand for services. Conversely, during periods of lower occupancy, these costs may decrease. Understanding the nature of variable expenses is crucial for property owners and investors as it aids in budgeting and financial forecasting. This distinction helps in making informed decisions about property management and investment strategies.