Updated almost 10 years ago on . Most recent reply
Using Proforma Calculators
Hi All!
I'm new to buy and hold investing. I'm using a excel spreadsheet that has a conservative 10% vacancy reserve and 10% maintenance reserve every month. I've spoken with turnkey companies that say they use a much lower number: 5% vacancy reserve and 5% maintenance reserve.
I get that I am being conservative and using 10% as a worse case scenario but I don't want to turn away good deals if they are matching my criteria otherwise. A fully rehabbed turnkey property will probably not need the maintenance reserve of 10%.
How do you all crunch the numbers so it makes sense to you? Thanks in advance!
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#4 All Forums Contributor
- Real Estate Broker
- Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH
Calculators and the like all all rough guides. You can assume half your rents will go to costs on a decent rental property in a decent area. Thing is that is an average. My portfolio typically performs pretty close to that. Some do better some worse, Some are on auto pilot for awhile then go bad for awhile and vice versa.
If you take a small sample like 1 property over a small time period it may be vastly different. You can have a house have no turnover or repairs for years then get hit with 2 evictions and horrible damage right in a row.
Don't forget
Spreadsheets do not rent properties. Tenants rent properties, and tenants do not read your spreadsheets.