Maintenance, CapX, Vacancy

[Michael Barnard]

I’m a rookie investor investing long distance. I’m wondering if I’m being too conservative. When I underwrite a potential deal I include 10% for maintenance, 5% vacancy, and 10% for cap x. Is this to high? It seems like when I run numbers on a property my offer needs to be embarrassingly low. What are folks using for these numbers?

TIA

[Anthony L Amos Jr]

Quote from @Michael Barnard:

I’m a rookie investor investing long distance. I’m wondering if I’m being too conservative. When I underwrite a potential deal I include 10% for maintenance, 5% vacancy, and 10% for cap x. Is this to high? It seems like when I run numbers on a property my offer needs to be embarrassingly low. What are folks using for these numbers?

TIA

 One thing to consider is the condition of the property upon purchase. You could potentially lower your maintenance if the property is turn key. Also, you'll want to research the area vacany rates and/or call local property managers to get a good number to use. I can send you a list of property managers in Columbus and Cleveland