MF Underwriting Rules of Thumb

MF Underwriting Rules of Thumb

Investor · Boise, ID · Member since 2015 · 6 posts · 0 votes

Hey all - I've recently relocated from Los Angeles to a smaller city in the Northwest US.  I'm working on buying apartment buildings in the 15-20 unit range and trying to figure out some rules of thumb to gut-check the expenses I'm using in my underwriting.  

I used to work in commercial brokerage so you'd think I'd just *know* it, but... that was in LA and on way bigger projects!

Anyway, cost of living in my target region is right at the national average - not too cheap, not too expensive.  I'm hoping you can help me with some rough per-door per-year numbers and any other rules of thumb you use.  I generally bucket all my expenses into the following: 

Payroll (Note: payroll made more sense on the institutional deals I used to work on.  I don't think I'll really have a payroll expense on these smaller deals - but, if that's true, it really blows up a lot of the ratios I used to use 'cuz it can be a big expense.) 

Marketing

G&A

Turnover

R&M

Contract Services

Utilities

Property Taxes

Property Management

Insurance

Capital Reserves

Specifically - I'm looking for per-door per-year numbers for the above, and total expense as a % of EGI (or gross) for these smaller (15-20 units) deals.

Thanks in advance!

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  • Investor · Boise, ID · Member since 2015 · 6 posts · 0 votes
    10y

    Oh - and PS, this is mostly a question about forecasting and evaluating properties PRIOR to due diligence.  I'd use historicals, of course, for anything that gets serious.  

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