Estimating Cap Ex and Vacancy

4 Replies

I've been looking at some small multi family units in North Florida. During my analysis, I guess on the percentage estimate for repairs, vacancy, cap ex, and management. 

How do you all estimate these figures?

In my opinion the numbers seem a bit high, mainly on the monthly repairs. Thanks in advance!

@Clayton Moss here is a spreadsheet that @ Sam Tato uploaded to the file section. Most newbie investors underestimate cost. You can play with the numbers to get an accurate capex figure. Depending on the monthly rent around $1000 per month then I use 23% total for vacancy,capex, and repairs. Add another 10% for property management.

Repairs: visit the property in-person and create a list of all the items that you think you will need to repair. Ideally, you bring a GC or a representative from your property management company to help you identify and estimate the costs. If they cannot make it out, take pictures of all the items that you think you will need to repairs, come up with your own estimates, and ask you GC/PM for feedback

Vacancy: based on the market and the historical vacancy. Keep in mind that if you are doing a lot of rehabs, the vacancy rate during renovations will be higher than the vacancy rate after renovations

CapEx: if you are referring to ongoing reserves, $250 to $300 per unit per year is standard for multifamily

Management: your property manager will tell you

Maintenance: based on the market averages and historical maintenance. Plus, if you plan on addressing a lot of deferred maintenance upfront, the ongoing expense should be lower.

Overall, work with a property management company who specializes in that market and in similar properties.

Thanks for the info, Theo! We do plan to visit the property, but I currently work over the road and am out of state. I will contact some property managers familiar with the market to get some ideas.