Updated almost 10 years ago on . Most recent reply
Analyzing a deal with low vs high quality tenants
From what I've read and heard (and from common sense) it seems there is an inverse relationship between the quality of tenant and typical repair/turnover costs. Higher quality tenants tend to do less damage to a property, are less needy, etc.
When analyzing a potential deal, what methods do you use for integrating this expected difference in repair/turnover cost into your analysis of the deal? For example, when high quality tenants are expected, budget 5%-10% of rent for repairs, but maybe push it to 15% for properties were lower quality tenants are expected? Or is there a better way to think about this?