Maintenance / Capex for lower income large apartment from 1960

8 Replies

My partner and I are looking at a 128 unit complex that's made up of 8 16 unit buildings, with a average rent of $450. 

The building was made in 1960.

We're not entirely sure how much we should project for maintenance / capex every month, in order to make the right offer on the building.

What do you usually budget on something like this?


Average rent of $450. Yeesh.

The building is old but what condition is it in? Is it mainly brick or a lot of wood siding? What's the condition of the roof, boiler, chiller, etc? Your lender will likely dictate how much they want you to set aside for replacement reserves? I would think $300/350 per unit each year, so $38-48k a year.

@Michael Le it's a brick building. I'm not entirely sure on the age of the roof, HVAC, plumbing, etc, yet. We're doing a tour this week. 

I feel comfortable budgeting for things like plumbing and HVAC, but everything else that varies with scale I need to learn more about. I'm concerned that your estimate seems low. Regardless of the rent, I still need to account for a low end kitchen, bathrooms, carpet / flooring, paint, as well as some amount for shared items like tuckpointing and the roof.

My company owns a deal in Temple, Texas, which is a 1973 build and 116 units. Our R&M and turnover are $600/unit (total, not each), and our replacement reserves are at $300/unit. Those are both annualized numbers.

I would think if it has been maintained somewhere in the 7-10% range.   Maybe more if it hasn't.  It's old for Texas, the rents are low, which will probably mean more abuse/maintenance.  

@Ben Mizes The problem with low rents is that the expenses become a higher percentage of the total income. Paint and toilets don't magically become cheaper just because you charge less rent. Whereas the expense to income ratio might be 50-55% in most class C properties of that age, you might be looking at 60-65% since your income is so low. 

@bruce that's what we're concerned about. As long as we can create a good estimate of expenses we can make an offer that still makes sense.