***Operating / Expense Ratios for Duplex / Triplex***
I'm conducting an analysis of a few Duplex and Triplex units in my area but have not seen enough deals to get a sense for average operating expense ratios for these types of properties. Assuming a management company, would someone mind sharing what they view as an average operating ratio for Duplexes and Triplexes? Any color around drivers of the ratio for this type of unit would be appreciated as well as anything tangentially relevant. Thanks!
Expense ratios should be between 35%-45% the difference in the scale will come from you calling of the city and companies during due diligence to confirm the P&L that was provided. Typically we underwrite to around 45% initially and confirm further if the deal feels like we want to make a move on it.
Originally posted by @Tyler Aunon:Expense ratios should be between 35%-45% the difference in the scale will come from you calling of the city and companies during due diligence to confirm the P&L that was provided. Typically we underwrite to around 45% initially and confirm further if the deal feels like we want to make a move on it.
Thanks Tyler. Does that range imply that utilities are passed along top tenants? Do you include reserves in that number?
If triple net leases you may end up a little less then 45%. Property management around 10%, Repair & Maintenance around 7-10%, insurance, utilities, other expenses in the P&L and other operating expenses should be included. Vacancy and debt service is not included in your operating expense ratio.