Is the MLS Always "Light" on Financial Data for Multifamily

[Brandon Sturgill]

So, I am quickly discovering that there are a lot of attractive multifamily properties in the area on MLS, but MLS has really limited financial data...is this common? Is pro forma not a listing requirement?

[Bill Gulley]

Use a 10% vacancy rate.

As to vacancy and pro formas, several ways to play with numbers, but I load the vacancy rate as a annual expense then spread that over the year at uneven amounts quarterly, 40% first qrt, 30% second qrt, 20% 3rd qrt and 10% last qrt.

This puts an exaggerated front end load on expenses, increased initially and reduced over time. I also take out existing vacancies for the 1st qrt to income.

The purpose of doing this is not to see how you'll possibly get rich but how you'll possibly go broke. This distribution will put a steeper hump to get over starting out. After a year I just level out the vacancy expense.

You can do the same with other variable expenses. Hit lawn care in season, snow maintenance, heating oil, outdoor maintenance are all seasonally adjusted to hit your expenses appropriately as would be incurred.

You should be able to get actual utilities, I add 2 or 3% as rates increase.

Pay taxes `due in January as paid.

Spreading 1/12th of expenses is fine for some things, insurance can be set side monthly, but spreading all expenses gives a poor indication of expected cash flow, so consider seasonal adjustments and actual payment requirements and that will give you a better idea of what to expect in each month.

Be conservative, again, you not doing this to see how rich you'll be but how poor you could be. :)