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:

Units26
Rent/Month550
GROSS INCOME171,600
% of IncomePer Unit/ Year
Vacancy/bad debt10%17,160 10.0%660
Management8%13,728 8.0%528
Electricity (owner portion)100 1,200 0.7%46
Gas (none - all electric)0.0%-
Water3,360 2.0%129
Taxes4,959 2.9%191
Insurance5,796 3.4%223
Dumpster120 1,440 0.8%55
Snow/Lawn/Shrub Maint200 2,400 1.4%92
Maintenance5%8,580 5.0%330
Reserve Fund5%8,580 5.0%330
Move Out Resets @ 1 every 2 months at $1250625.00 7,500 4.4%288
TOTAL74,703 43.5%2,873
NET INCOME96,897
CAP RATE15.4%