Does anyone have any good metrics that i can get/ use for Multi-Family Buildings. I need to understand what are the typical percentages that should be allowed for Reserves, Taxes, Vacancies, Maint & Repairs, Prop Management, other operating expenses. What is a good rule of thumb for all in Op Expenses before you determine your Net Cashflow ? Thanks, Brian
@Brian Noel All these rules of thumb are different for each market/submarket. What works in South Dallas doesn't fly in North Dallas. Similarly, "rules" that apply in Cali are not even close to those in TX or FL.
Would be helpful if you provided location, size / type of property and demographics.
@Brian Noel All these rules of thumb are different for each market/submarket. What works in South Dallas doesn't fly in North Dallas. Similarly, "rules" that apply in Cali are not even close to those in TX or FL.
Would be helpful if you provided location, size / type of property and demographics.
Omar, I'm primarily looking in Denver and Colorado, although i'm very open to other cities and states. For me it's all about the cashflow. I need a Cap Rate of 8% minimum and would prefer to get something closer to 10-12. I'm looking at units that are from 8-36 units. Even if i cannot get precise numbers a range would be helpful. For example in my residential rentals i keep 8% annually percent for repairs and maintenance and 3-4% of vacancies. I am trying to find good industry benchmarks. Hope that helps. Brian.
Omar, I'm primarily looking in Denver and Colorado, although i'm very open to other cities and states. For me it's all about the cashflow. I need a Cap Rate of 8% minimum and would prefer to get something closer to 10-12. I'm looking at units that are from 8-36 units. Even if i cannot get precise numbers a range would be helpful. For example in my residential rentals i keep 8% annually percent for repairs and maintenance and 3-4% of vacancies. I am trying to find good industry benchmarks. Hope that helps. Brian.
I would steer clear of 10-12 cap properties. In all likelihood, you will be dealing with a very low quality tenant and it's not worth the hassle. Unless you can be a good slum lord, you are going to get into some dodgy deals with shady people.
This article might help you in not focusing on cap rates: The Cap Rate Is Dead, Long Live the Cap Rate!
Im trying to get to a number, i.e of $10,000 per month after DSR and all expenses. Im essentially doing a reserves calculation. In other words if i could invest $1,000,000 in a building cash or up to $1,600,000 cash or borrow up to $1,600,000 and buy a building up to $3.2M. I'm modeling the various scenarios to determine after all my expenses and DSR how much will i NET in my pocket.
Have you tried the tool calculator in the bigger pockets website? Each expense item has a suggested percentage and there are a lot of other useful features.
You're not going to find an 8-12 cap in Denver for multifamily. If 8% is your floor, stop looking in Denver. Going cap rates for multis are 5 to 5.5. If you want to find a "good" apt in Denver, then reach out to @Rodolfo Canon
Looking for a value-add play? Needle in a haystack in the Denver apt market.
Chris, Im not looking just in Denver, In fact you are correct you cant find 8 or 10 in Denver, but you can in Pueblo, Colorado Springs, Longmont, Greeley etc, which i'm fine with. BTW, one of my best friends is Chris Lopez in Cherry Creek. You must be brothers....lol.
The expenses are determined on a deal-by-deal basis. A good place to start is to get your hands on the T-12 for a specific deal to see what they are currently operating at and talk with your management company to see if they believe they can operate the property better.
If you are just looking for ballpark numbers in general without having an actual deal, you can download IREM's Income and Expense analysis report, or create your own report by accessing the T-12s for the current listing in your target market.