50% Rule: Does this apply to Small MF (2-4 Units)

[Matthew Metros]

I am underwriting a deal and the marketing package has unrealistically low expenses. As a rule of thumb, I applied the 50% rule to meet reasonable 

I was told by another investor that small MF doesn’t have 50% expenses. It’s usually more like 30-35%. 

Should I Just have to underwrite with the given expenses to find out? Is there a better rule of thumb? I ask because I don't want to scare good deals away...

[Aaron W.]

@Matthew Metros I think your expenses can vary depending on the property. Without the T12 or other financials, it will be hard to really estimate it, unless you live or are very familiar with the market you are looking to invest in. The positive thing about multifamily is you are able to calculate multiple units on one property, which will typically lower the expenses.

It might help to ask those who are currently investing in the market you are looking at. They may be able to better answer your question.

Good luck!