Expense Budgeting for Large MFH vs. Small MFH Properties

[William Hughes]

Hi. The rule of thumb for estimating CAPEX and Repairs/Maintenance is from 5-15% of monthly rent. Does this rule of thumb hold up for larger multifamily properties (above 4plex)? For example, would a 10-unit apartment complex still have CAPEX and Repair/Maintenance costs of 5-15%, or would it be a lower percentage due to scaling of costs over more units? Any advice is appreciated. Thanks!

[John Dean]

Scale itself doesn’t really mean anything in relation to costs, it’s the process you are using. You could have 100 units and use a general contractor for everything or have 5 units and have a part timer paid hourly who works for a builder full time. You could be handing everything over to third party management as well. I think it’s pretty dangerous to start generalizing these things due to the exponential nature of what a spreadsheet calculation mistake could cost you.

If you already have a process in place it’s pretty easy to see what it would look like at different scales but that needs to be defined from the beginning.