10-Unit Property built in 1920

[Greg Horowitz]

I am looking at investing in a 10 unit property in Worcester County, MA. I am underwriting the property and having trouble estimating the expected maintenance. Obviously with an older property there tends to be more R&M than a newer property. The property is a brick building and the roof and boilers have been updated in the last 3 years. The property is occupied by low income families that have rented at the property for a few years. The property averages about 2 units turnover a year, minimizing the amount of turnover repairs needed. I am trying to estimate the R&M expense and currently have $7,500 annual expense plugged in ($750/unit). Is this too aggressive? Does anyone have experience with older properties that can opine? Thanks

Greg Horowitz

[Colby Fryar]

That is old- did you also include adequate capex up front?  With an additional allowance for reserves and annual cap-ex that may be adequate?  I typically use 10% for cap-ex/ reserves.  I will wait to hear from the more experienced pros as well.