What is an example of fixed costs in real estate?

Fixed costs in real estate are expenses that do not fluctuate with the level of occupancy or business activity. They remain constant regardless of how many units are rented or how much service is provided. Utilities minimum charges exemplify fixed costs because these charges are due each month regardless of consumption. This means that even if a property is completely vacant, the property owner must still pay a minimum charge for utilities to maintain service availability.

In contrast, guest supplies expenses, housekeeping supplies costs, and credit card fees can vary depending on the level of occupancy and service demands. For instance, the cost for guest supplies will increase with more guests, and housekeeping supplies will depend on the number of rooms cleaned. Similarly, credit card fees can vary with the volume of transactions, making them variable costs rather than fixed costs.