Average Memphis Maintenance & CapEX (Turnkey Properties)

[Caleb Heimsoth]

Hi Everyone,

I am looking at investing in Memphis through a turnkey provider. I am wondering what local investors use for Maintenance and CapEX rates for Memphis? From what I've seen so far, most Turnkey providers don't really account for maintenance or CapEX or they just group them together, which I disagree with. Roughly speaking, I am considering using 5% of monthly rent for CapEX and 6% for vacancy. Does that sound too low, or too high? This would be a fully rehabbed property, so I am expecting CapEx would be low, but I want to make sure I save up enough during say the initial 5 years so I don't lose money when say a roof needs to be replaced. If it helps more I would be looking at properties in a B neighborhood in the 90-100k range.

Please let me know if you need anymore information.

~ Caleb

[Curt Davis]

@Caleb Heimsoth

Giving you a realistic example here is what I see:

$80k purchase, Annual ins $550, annual taxes $1,200, 20% down financing at 5% IR, Estimated $5k total closing cost, 8% vacancy, 8% maintenance, 8% property management, 5% capex, $895 monthly rent = $147.15 in total Net monthly cash flow.  This is what the home looks like with all your factors in place. 

Just for fun, you take out capex, maintenance and repairs and go with a gross cash flow figure your looking at about $334.00 monthly. 

Many companies will show you how they have decided to provide what the cash flow will look like and no one is wrong in doing so. All that matters is what you factor into your own proforma. 

Same example deal above just calculated differently. One looks great and one looks not so great but same deal regardless. 

Good luck