Property Analysis: Operating Expense Percentage

[Joseph Duenas]

When analyzing a multifamily rental property, what is a good percentage to use for operating expenses (e.g. 10%, 20%, 30%)?  Thank you! 

[Sam Grooms]

If you're deciding whether or not to analyze a deal, a 50% rule (or similar) is OK to use. But once you decide to analyze a deal, you need to underwrite using actual dollars and actual percentages (for property management). Using rules like this in large multifamily can lead you in to bad deals, and/or keep you from buying good deals.