Buffalo, NY · Member since 2016 · 16 posts · 0 votes
I've been looking for my first rental property in Buffalo, NY area and using the rental property analysis tool from this site to do evaluations. I use estimates of 5% vacancy, 5% repair & maintenance and 10% capex, which from my research are typical values to use. Using these estimates, I have not had any luck finding a property that returns an acceptable monthly cash flow, even when putting in sell prices considerably less than asking. I'm looking at duplex, triplex and quadplex's and shooting for around $200 per unit per month in positive cash flow, which again seems to be what is recommended.
Are my estimates for vacancy, capex, etc too high?
Is approx. $200/unit/month expecting too much?
Or are seller's just that out of line with their asking prices?
Investor · Madison, WI · Member since 2015 · 44 posts · 31 votes
10y
I've always thought that CapEx as a percent seems off. Doesn't it depend a lot on what the rent is? A 1500 sq ft house that rents for $800 vs a 1500 sq ft house that rents for $3000 could have about the same CapEx in real amounts. It seems more prudent (and time consuming) to estimate actual costs based on the ages and condition of everything. Does anyone do this, maybe with a spreadsheet set up for this purpose?
Real Estate Investor · Buffalo, NY · Member since 2009 · 151 posts · 49 votes
10y
Mike ....it all depends on which area of WNY you want to deal with. I'm going to give a piece of advice for you I've discovered recently and I've been doing this for a long time.
"You don't buy property to live in, you buy property to sell. "
Meaning if you buy a property, how fast can you sell it if circumstances changes.
please remember that it does not account for inflation and it also assumes that everything in the house is new.
Here is a more advanced spreadsheet that you can take a look at which accounts for both inflation and the age of the items. This is shared on Google Docs so please do not edit. Please make a copy and save it to your own drive before editing. I would love to provide an excel version but it isn't converting correctly.
As you can see, when you account for inflation and the age of the items the numbers get much much higher which is a bit of a reality check! Pretty positive I have done all of the numbers correctly but if anyone spots any errors please let me know.
Investor · Buffalo, NY · Member since 2015 · 2 posts · 1 vote
10y
Hi Mike,
I started investing in the south buffalo area in 2009 to current. I picked up some 3/3 doubles for around 20,000- 40,000 and put roughly another on average 25000 into them. Rents go for on average 600- 650 sometimes up to to 750. I was able to do this with my own money so I don't have any mortgage on them. So these property's bring in roughy 14,000 a year with about 4000 in expenses so each property profits 10,000 annually..As I mentioned in a previous posts property's inflated and inventory is low at this time, but if you can grab an inside deal go for it!
Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
10y
Forget the percentages ... come up with a grassroots estimate of CapEx. Take all the major systems, how much it would cost to replace them, then divide by the usable lifespan for that item ... sum them all and you get CapEx/yr. Made up example: roof = $10,000/25 yrs = $400/yr. You can build all these out with parameterized formulas in excel (probably what the other poster was referring to as the "spreadsheet") so it can be reused to underwrite other deals. Yes, it takes more time to do it this way, especially the first time, but this is the proper way to do it IMO, you will learn a lot by building out this analysis, and it will get easier and faster with each deal you analyze.