Hi, we're currently shopping for a multifamily unit property in San Francisco. When we're doing deal analysis, what should we be using for maintenance and capEx expense per month? Most of the properties we're looking at are built between 1900-1920s, and are two to four units. Some of the "rule of thumb" that we've seen include:
#1: $1.25-$1.30 per sqft for older homes annually
#2: $1,000-$3,000 per door annually
#3: 5-10% of rental income, which I know can be inflated in SF since the land value is so high
Our landlord friend quoted $500-$1,000 per month PER UNIT but that seems ridiculously high. Hoping to catch some more local landlords who can share their experiences with us.
Hi @Monica Choo, it will depend on the condition of the specific property. E.g. what is the RUL (remaining useful life) left on the roof, HVAC, water heaters, etc...In general, I use 3% for maintenance and 3-5% for capEx. It's not wrong to overbudget for capEx, although $500-$1000/month is very very high...