Estimated Costs Lakewood Ohio

10 Replies

Hi BP community! I am ready to buy a double+ in Lakewood Ohio, but it seems that out of pocket ROI seems low (~5-6%) and I am curious what others are estimating as expenses. The houses are all about 100 years old so I estimate my maintenance costs at 15% of my gross rents (GSI). Also, I don't include mortgage payments in my calculation because I'm paying cash. How are others estimating expenses in the Cleveland area for something similar?

Out of pocket ROI = (all annual expenses + annual capex) / all cash invested

Here's my expense breakdown on a double: 

Maintenance: 15% of GSI

Property Management: 10%

Water/Sewer/Garbage: $150/mo 

Insurance: $65/mo

Capex: 6% of GSI

Taxes: County website

Any insight is appreciated!

@Matthew Jure

15% repairs is quite a lot each month. You’re going to have months you need repair and months you won’t. I hope it doesn’t average out to 15% of gross rent. I have several properties in Cleveland and I have been allotting 5% capex and 5% repairs and haven’t really dipped into them much, at least not on a monthly basis. I do, do all my repairs and rehab upfront so there isn’t any deferred maintenance though.

Your maintenance is high...and I don't see any vacancy consideration...with older properties like this it depends on condition...do you have a city code requiring electric or plumbing upgrades...be ready to shell out $4-6k....how are the systems...HVAC, plumbing, roof...foundation...what about appliances?

Quite frankly, the age of the house is not as important as the overall condition. My approach is to look at your up-front costs...what will it take to get the units rent ready or drive rents higher...if you are doing a renovation up-front (or the property is in great condition), you can reduce your maintenance expense significantly and just let CapEx build slowly until you're comfortable.

If you want to discuss in further detail, email me and we can look at all the numbers. Good luck! 

@Henry LiChi

Nice I'm lowering my maintenance and capex. I figured that was my problem. I've been ultra conservative to make sure I cash flow. I saw you have a 10 unit and a couple 2 units greater CLE. Do you change your maintenance and capex % based on whether it is an apartment building vs 2 family house?

I would think you would spend a little less on capex since everything is under 1 roof. I would assume maintenance would stay the same. 

@Brandon Sturgill

Great point. I include vacancy of 8.3% (1/12 months). I'm expecting to spend at least $4-6k on any property I get because most don't have central air and the houses I've looked at always need some type of upgrade. I'd like to find a property that I can renovate up front. I'll send you the spreadsheet I made. I could use an experienced set of eyes look at how I evaluate properties. 

I invest in multi families in Lakewood and am happy to share my spreadsheet with you. I put maintenance and vacancy at 5%, insurance won’t be less than $85/mo, don’t forget lawn and snow (unless prop mgmt is taking care of this). Water for Lakewood can generally be calculated at $40 per person per month (pending on how many people live in the building). Like I said, I have a spreadsheet where you can enter all these values in and get your NOI, cap rate, etc.

Happy to connect you to anyone you need in Lakewood as well (realtor, mortgage guy, inspector, etc.).

DM me and we can chat further! Happy to help any way possible!

@Matthew Jure

The only way capex and repair would be less in a 10 unit apartment is if you own equivalent in duplex (5 duplex or 10 units).  In an apartment you get potential repair calls from 10 different tenants versus my 3 duplexes which I rarely get any repair calls from.  I’ll be honest though, I keep my place immaculate and above the average standard in its vicinity.  It is always cleaned and preventive maintenance is done regularly.  I rarely receive maintenance calls in my properties because of this.

Originally posted by @Matthew Jure :

Hi BP community! I am ready to buy a double+ in Lakewood Ohio, but it seems that out of pocket ROI seems low (~5-6%) and I am curious what others are estimating as expenses. The houses are all about 100 years old so I estimate my maintenance costs at 15% of my gross rents (GSI). Also, I don't include mortgage payments in my calculation because I'm paying cash. How are others estimating expenses in the Cleveland area for something similar?

Out of pocket ROI = (all annual expenses + annual capex) / all cash invested

Here's my expense breakdown on a double: 

Maintenance: 15% of GSI

Property Management: 10%

Water/Sewer/Garbage: $150/mo 

Insurance: $65/mo

Capex: 6% of GSI

Taxes: County website

Any insight is appreciated!

 Instead of using a % of gross rents to calculate capital expenses I think investors would be better suited to just itemize it.

For example.

  • A typical Lakewood roof will last 30 years. The cost of a roof is going to be around $5,000
  • A furnace is going to last around 40 years. The cost of a new furnace install is going to be around $3,000
  • A hot water tank is going to last around 15 years. The cost of a new hot water tank install is going to be around $1,000

How old the above 3 items are on the prospective property is going to determine how much life they have left and how much you should account for in cap ex savings.

Originally posted by @James Wise :
Originally posted by @Matthew Jure:

Hi BP community! I am ready to buy a double+ in Lakewood Ohio, but it seems that out of pocket ROI seems low (~5-6%) and I am curious what others are estimating as expenses. The houses are all about 100 years old so I estimate my maintenance costs at 15% of my gross rents (GSI). Also, I don't include mortgage payments in my calculation because I'm paying cash. How are others estimating expenses in the Cleveland area for something similar?

Out of pocket ROI = (all annual expenses + annual capex) / all cash invested

Here's my expense breakdown on a double: 

Maintenance: 15% of GSI

Property Management: 10%

Water/Sewer/Garbage: $150/mo 

Insurance: $65/mo

Capex: 6% of GSI

Taxes: County website

Any insight is appreciated!

 Instead of using a % of gross rents to calculate capital expenses I think investors would be better suited to just itemize it.

For example.

  • A typical Lakewood roof will last 30 years. The cost of a roof is going to be around $5,000
  • A furnace is going to last around 40 years. The cost of a new furnace install is going to be around $3,000
  • A hot water tank is going to last around 15 years. The cost of a new hot water tank install is going to be around $1,000

How old the above 3 items are on the prospective property is going to determine how much life they have left and how much you should account for in cap ex savings.

 Hi James - great advice. Adjusting my spreadsheet now :)