How to calculate expenses

Question

Hi everyone,

I am a new investor and I was curious. Does your percentage you save for capex, maintenance and other expenses change depending on the value of your property? Or do investors usually save the same percentage. How much different are expenses for a $700,000 rental in San Francisco compared to a $100,000 elsewhere, assuming same bedrooms and SQF.

Thanks for the help!

Bill B. · Answer

Don’t forget things that vary like vacancy on $4000/mo loft and $300/apartment.

Some expenses are unit size specific. (Roofing, siding, painting, to a degree AC) and those that are not washer/dryer/fridge.

Flooring type is everything tile/hardwoods/Vinyl? Or do you have wall to wall carpet.

Is the place 2 years old, 20 years, or 200 years?

Is roofing shingles or clay tiles, flat or pitched?

Stucco siding, or wood or vinyl?

Don’t forget yard maintenance, treees and weather if they are concerns.

If you’re buying in the neighborhood you live in and buying the type of properties you live in you can use yourself as a ballpark and add 10-20% for the “tenant doesn’t treat it like you do tax”

Honestly, first property take your worst case numbers in a model ad see if you can survive. After a couple years you’ll know your property type in your location. You might be surprised how low they can be or how high.

Chris Babcock · Answer

I would say no if you are comparing apples to apples (i.e. Class A property in San Fran to Class A property in San Fran) Otherwise it will vary location to location and property class to property class.