Closing costs are everything you pay at the settlement table beyond the purchase price itself: lender fees and points, the appraisal, title search and title insurance, recording fees, transfer taxes where they apply, attorney fees in states that use them, and prepaid items like the first insurance premium and property-tax escrow deposits. They vary widely by state, lender, and deal size, so the reliable number is the itemized estimate your lender is required to provide — not a rule of thumb.
For an investor, closing costs matter twice. First, they are real cash out of pocket, so they belong in your cash-on-cash denominator alongside the down payment. Second, most of them are not immediately deductible — many get added to the property's cost basis or amortized over the life of the loan — so keep the settlement statement with your permanent records and hand it to your CPA.
This is general educational information, not legal or tax advice. Rules vary by state and locality and change over time — check your local law and confirm specifics with a qualified professional.