Multifamily Tenant Turnover Values to Use

[Henry Der]

I am looking at a 26 Unit rehab project in the 1700 E Raines Rd area (Memphis, TN) and I am having some questions about tenant turnover and numbers and project validation.   I'm new to Memphis, but understand this is a reasonably good area.  If any of you are willing to help me with reviewing the project, I would love that!

Besides that, I have a few questions:

1.  Spreadsheet below, I get a 15% return, expenses at 43% of income.  Most people tell me it should be 55 - 60%, but I am not sure what I am missing.  Can you point out any expenses that should be included that I have missed or miscalculated?

2.  End result is are refinished qty. of 26:  2Br, 1Ba units for $25K - good?

3.  What rents do you think I should target.  I'm using $550 tenants pay electricity, I pay water, no gas.

4.  I'm using 10% vacancy, 8% management, 5% maintenance, 5% reserve.

5.  Suite Turnover cost of 1 unit every 2 months at cost of $1250 per = > 7500/yr.

Is this too low?  Should it be 2.6 units/month (10% vacancy) x 1250 => $39,000/yr?

This is what I need your help on - to understand the turnover rate and how it relates to vacancy rate.

So these are the numbers:

Units		26
Rent/Month		550
GROSS INCOME		171,600
			% of Income	Per Unit/ Year
Vacancy/bad debt	10%	17,160	10.0%	660
Management	8%	13,728	8.0%	528
Electricity (owner portion)	100	1,200	0.7%	46
Gas (none - all electric)			0.0%	-
Water		3,360	2.0%	129
Taxes		4,959	2.9%	191
Insurance		5,796	3.4%	223
Dumpster	120	1,440	0.8%	55
Snow/Lawn/Shrub Maint	200	2,400	1.4%	92
Maintenance	5%	8,580	5.0%	330
Reserve Fund	5%	8,580	5.0%	330
Move Out Resets @ 1 every 2 months at $1250	625.00	7,500	4.4%	288
TOTAL		74,703	43.5%	2,873
NET INCOME		96,897
CAP RATE		15.4%