BiggerPockets

Hi guys, longtime bigger pockets lurker here.

I am looking to buy a 3-4 unit property in my hometown to buy and hold. A couple questions for everyone on building good pro forma analysis before I get in touch with a seller.

1) How do you determine a vacancy factor for a 3-4 unit property?
2) How much should I put in the cash flow analysis for repairs/maintenance?
3) I plan on living in one of the units, from a tax perspective is PMI a deductible expense?
4) In my analysis I have a vacancy loss, management fees, replacement reserves (repairs and maintenance), property taxes, insurance, PMI, and utilities. Any other expenses I need to be including in my analysis?

Thanks for any insight, looking forward to being a part of the community.

The vacancy factor is a function of the market. Furthermore, even in the same city vacancy can swing substantially from one local to another. Unfortunately you will need to do some research. Hopefully nothing over 10%.

Are you handy? Do you plan to auger toilets or call someone to do it? Better safe than sorry…

Wouldn’t you agree @Bill Gulley Is a funny guy!

Originally posted by Ben Leybovich:
The vacancy factor is a function of the market. Furthermore, even in the same city vacancy can swing substantially from one local to another. Unfortunately you will need to do some research. Hopefully nothing over 10%.

I understand that I need to do some research, I was just curious where I can conduct said research. I am having a hard time tracking down any reliable data on vacancy for anything other than apartments. Maybe that is the best data I can get my hands on?

In the meantime I will plug in 10% as a nice conservative placeholder.

Thanks so much for your guys' responses!

All well and good, but it depends on your market. Ask around with other investors, at REI meetings if you have them, ask lenders what they see.

If you applied rules of thumb, like 2% in my market, you'd never buy reantals. You need to nail it down, look at the tax angles, hopeful appreciation, if you buy crappy properties today and you don't improve them, you'll have nothing more than a job, IMO.

Look to your market, not ratios to buy into. Good luck...

Looks like you have a strong rental market: partial article from Boiseinvestmentproperties.net

Tony A. Drost
http://www.frpmrentals.com/
http://www.boiseinvestmentproperties.net//
First Rate Property Management, Inc
Boise, ID

Market Update On Rents And Vacancy

Below are the results of the SW Idaho Chapter of the National Association of Residential Property Managers 4th quarter survey. It is important to know that NARPM members typically manage single family homes and small multi-family dwellings. So this data does not include large apartment complexes that usually have many amenities, such as pools, clubhouses, workout facilities, computer center, etc. Because of those amenities, those properties typically rent for much more.

VACANCY RATES:
Below are a line graph showing vacancy for single family home rentals and multi-family rentals. As you can see, overall rental vacancy was just about 3% at the end of 2012. It was interesting to see that multi-family rental vacancy, over 4%, was over twice that of single family homes, at about 2%. Why? Well, for certain, the inventory or supply of multi-family dwelling is quite a bit more than Single family home rentals. So that could be a factor. Another factor could be that demand for single family rental homes has improved. As we have mentioned in past posts, we are seeing well established people choosing to rent instead of buying. Lastly, single family home rental tenants tend to stay longer and being winter, they are choosing to stay put for now.