How do you calculate expenses?

[Daniel Urban]

Hey everyone one BP!

So I am interesting in buy and hold real estate investing. In my area, Corpus Christi, TX, I am running into the issue of not coming up with enough cash flow for the units(SFR, Duplexes, Triplex). So I am wondering if I am setting aside too much for my expenses or maybe not enough? I am also wondering, how do you calculate expenses like CapEx, Vacancy, Repairs, and Property Management(I guess property management would be just seeing how much it would cost with the management company you want to go with)?

Currently I just use the same numbers each time:

Repairs: 5% of rent

Vacancy: 5% of rent

CapEx: 10% of rent

Property Management: 10% of rent

Thank you very much for any information!

Daniel U.

[Derek Tellier]

Those numbers are reasonable. Main thing being is you need to decide what you’re comfortable with having put aside. Naturally you shouldn’t be comfortable saying nothing. 

Next step is determine what kind of cash flow you want. $100/door, $200, $300? 

If you’re plugging in the numbers you’re comfortable with and not getting the cash flow you want then keep looking. Finding a deal isn’t easy and doesn’t happen quick. Just keep digging, talk to local realtors, wholesalers and basically EVERYONE you know. Tell them what you’re looking for. 

Sooner or later you’ll find something that fits but it’s likly going to take some time and patience. 

Good luck.