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:
|% of Income||Per Unit/ Year|
|Electricity (owner portion)||100||1,200||0.7%||46|
|Gas (none - all electric)||0.0%||-|
|Move Out Resets @ 1 every 2 months at $1250||625.00||7,500||4.4%||288|
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