When crunching the numbers all I seem to see people using are percentages. Obviously some things are, such as mamagement. But most costs are t based on percentages. For example, a roof costs the same for a building that rents for $900 vs one that rents for $1400. With a capex percent based line the $900 rental would have less then the $1400 rental but the actual cost would be the same.

Add replacing or fixing a toilet, lawn care, sometimes even insurance and it seems to be most costs would be a higher percent the lower the rental amount. 

If we used actual numbers when looking at the numbers would anyone buy a place with less than $1,000 under one roof?

@Ken Virzi you are absolutely correct, and this is why people on here have written articles about why they don't buy cheap properties. @Ben Leybovich should chime in shortly about 30k pigs...

I personally own some inexpensive apartments, and the expenses are most definitely not 5% of gross revenue! As you suggested, they are closer to $100 per door per month. This comes out to a much higher 15-20% number. However, the deal still works fine. 

Too many people have no idea how to evaluate a deal past generic numbers they type into a calculator. 

Even less people take a serious look at how long they intend to own the property or what the exit strategy is. Everything has an anticipated life span but not everyone is going to own the property throughout that entire life span.

Roof example, you buy a house with 5-10 yr old roof, you realistically want to hold on to it 10-15 yrs max and then 1031 into something bigger... You are unlikely to need to replace the roof. Your sale price might take a hit but not as much as new roof. 

Again obviously there's variables here but a good home inspection should lay out a baseline of the condition of your property and it's major systems.

Yup :)

Is it time for another article on the blog?

Agreed. That's why I think people should make their own calculators instead of depending on forms. If you make your own spreadsheet you will understand the numbers better and you can change your inputs to $ or % depending on the situation. Sometimes it is easier to use percentages if you don't know actual figures but unless you really know what percentage to use, you are taking a risk by just copying what other people suggest. That is why it is of the utmost importance to know your market. 

Just submitted to Allison another article on this. A bit spicy, not sure if she'll keep the spice. But damn - how stupid can folks get in the face of the constant preaching of reason and logic...?!

@Ben Leybovich Well even the webinars and BP calculators are all using pure percentages 🤷🏽‍♂️

Originally posted by @Ken Virzi :
@Ben Leybovich Well even the webinars and BP calculators are all using pure percentages 🤷🏽♂️

 HAHAH What does that tell you?

@Ken Virzi @Matt K. Is right on. You need to look at the actual estimated life span of things and since you know your exit timeframe you can figure out an exact dollar amount to save every month. It's fun throwing around numbers and percents and formulas but this is how you actually figure out your costs when you have a specific deal your underwriting. You really have to dig in and actually know what your looking at or have a good inspector to help you.