Questioning the numbers

5 Replies

No deals yet but am looking. I keep “running the numbers” and I’m concerned I’m missing something. I’m looking at properties, 2-3 unit multifamily and single, with little to no repairs needed.

Looking at:

Estimate Rent/ income

Mortgage, tax, insurance

Vacancy (10%)

Maintenance (5%)

Cap X (5%)

Property management (10%)

Evaluating by rent to value % , cash on cash %, ROI

Am I missing or overlooking anything?

@John Lewellen make sure you network with local investors to check your percentages. You are looking for the right things, but you will want to check local numbers. For instance, in my area here in the Chicago suburbs real vacancy is under 5%. If I budgeted 10% for vacancy I would never buy anything!

@John Lewellen to second what @John Warren said I would also check with the management company that you plan on using. Vacancy %’s can vary based on how well the management company operates, their aggression on rental rates, etc.

You could also ask them what their average maintenance % of gross rents is but most have no clue.

Property taxes may or may not adjust based off of current valuation by city and what you buy it for. You should account for these changes when necessary.

Capital expenditure is the one you should really hone in on unless you plan on holding for 20 years to see them all through their life. CHECK PLUMBING AND ELECTRICAL.

Not much else to it besides that.