Am I over estimating expenses?

1 Reply

I'm about to jump into my first real property and I want to know if I am overestimating expenses.  It's a 3 family for $70K and rents are generating $2100 per month.  The property needs about $20K worth of work.  I have all the current owners expenses (tenants pay their own electric), so I know those are accurate.  But, am I overestimating on the accrued expenses like vacancy, maintenance, ect?

Actual Expenses
Water$75.00
Trash$60.00
Heat/Gas$361.00
Sewer$60.00
Insurance$150.00
Snow/Lawn$100.00
Taxes$200.00
 
Estimated Expenses 
Vacancy$210.00
Management$200.00
Maint$210.00
CapEx$210.00
Total Expenses$1,836.00
Rents$2,100.00
Monthly Cash$264.00
Yearly$3,168.00

You may have noticed that there is no figure for financing or mortgage expenses. The down payment and rehab money would come out of pocket (about $27K) and the owner will carry the mortgage for a few years which would allow me the time to fix up the place a bit and refinance into a conventional 30 year. The ARV woudl be $130K. I would estimate the mortgage expense to be about $300 per month on a $65K-ish mortgage. If I'm correct on the accrued expenses, it's not really a deal worth doing so I need a little BP community help.

Thanks,

Jeff

As soon as I posted the topic, my spreadsheet got jumbled.  Here is the text version:

Actual Expenses

Water       $75.00

Trash       $60.00

Heat        $361.00

Sewer         $60.00

Insurance     $150.00

Snow/Lawn      $100.00

Taxes      $200.00

Estimated Expenses

Vacancy     $210.00

Management      $200.00

Maint     $210.00

CapEx $210.00

Total Expenses     $1,836.00

Rents     $2,100.00

Monthly Cash     $264.00

Yearly     $3,168.00

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