Hello all I am currently underwriting a deal for a 2 family 3 story brick home in brooklyn,ny. I will have one 3 bedroom 2 full bath unit and the garden rental will be a 2 bedroom 1 full bath unit. I know my property taxes but I wanted to see if anyone can chime in on what they think my common electric cost, maintenance, water bill, and insurance be on a property like this. I will have common lighting in the front, in the backyard and on the deck, and on the rooftop. For maintenance I will pay all my taxes/utilities on my own so I would only be interested in maintenance for cleanup/tenant problem calls. Thanks
A rule of thumb for a portfolio of properties over a long term is that 50% of gross scheduled rents will go to vacancy, expenses, and capital improvements. For a single property in any one year the actual results can vary quite a bit. At the very least you'll have taxes and insurance, so that's the best you can do. The worst can be much, much worse. Like one of my properties last year where I spent more than 50% of the year's rent on sewer line repairs.
From the remaining 50% you have to cover your debt service, if any, and take your cash flow.
A big chunk of that is property management. Around here they typically charge 10% of collected rents plus half a month's rent to fill a vacancy. So, with one vacancy per year that's 14% of the year's rents. If you self manage you can earn that slice for yourself.
Jon Holdman, Flying Phoenix LLC
Jon thanks for your insight, your maintenance numbers are close to what i have been scouring around for but the other part of your stats seem different than in my area. Sewer/water lines 4ft or more underground are really costly to do with all the permiting and excavation labor.
hello Martin. Since this is NYC we have the toughest most political department of building in the country, that's were most people will have problems. In terms of maintenance your lighting won't be too much because it won't be on all the time, maybe 50-100 a month. As for insurance if your in any place near the new flood maps it will be quite hire then last year, just pick up the phone tomorrow and call State Farm or all state and ask for a quote that will give you an exact number. Make sure you throw out garbage properly and recycle , sanitation tickets are $100 a pop. Even if someone throw a marketeer on your front yard and you don't throw it away sanitation gives you $100 ticket. Wrong recycling, you guessed it $100 ticket. Make sure you have extra strength black garbage bags to hide what ever is inside because the city likes to make their own problems so they can fine you. Maintenance on old mechanical equipment can be costly, are your units updated or not? Any work done needs to be filed for in Brooklyn, between filing fees and architects fees any little basic job (and I mean any small job)will cost you 4-5000 before even actually pulling a permit to start working.
Adam thanks for response. This is a gut renovation with all new water heaters and appliances. Garbage throwout will be done by the maintenance company. I heard electric for this size of a building with 2 units is about $60 a month. Mainentance would be $90 a unit so $180 a month and insurance i will call like you said.
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