What Are My Costs Multifamily (2-4 units)

Question

Hello All,

I am planning on buying a multifamily owner occupied property shortly in Jersey City NJ.

I am trying to compile a full list of costs/allowances that I have to account for on the front end when doing my deal analysis.

I am currently including the following;

-Mortgage.

-Closing costs.

-Vacancy.

-Cap Ex.

-Maintenance/repairs.

-Water.

-Management fees (should I choose to use management).

-Property insurance.

Would appreciate any help anybody could offer in identifying any items that I may have missed.

Cheers,

P. Quaid

Patrick Q. · Answer

@Lee Judd

👍

Lee Judd · Answer

@Patrick Q. I don't blame you a bit. It does cut into profit a little but I wanted you to know that it's less of a hassle/cost now than it was in the past. If I had my choice between two properties that were equal I would choose the one that wasn't in the flood zone

Patrick Q. · Answer

@Lee Judd

Thank you.

It’s the flood itself that I am trying to avoid more so than the cost of the flood insurance.

I would rather avoid the problem altogether.

Lee Judd · Answer

Don't let flood zones keep you from a good deal. Flood insurance isn't as expensive as it once was.

Patrick Q. · Answer

@Lamont Chen

Thank you.

I am staying at least a block away from the flood zones.

I am keeping a reserve for miscellaneous stuff such as the items you mentioned.

Lamont Chen · Answer

@Patrick Q.

In NJ the landlord pays for common electric (hallway lights, outdoor lights, etc.). In a miscellaneous bucket you can put some reserves for legal, snow cleaning, landscaping, power washing, etc.). Also check if the property is in a flood zone which you would then need to factor in flood insurance.

Jonathan R McLaughlin · Answer

@Patrick Q. was going to say garbage too. Watch for revaluation of taxes. Sewer is often separate from water and if septic make sure to budget for pump out/cleaning ($500/year YMMV). Lock changes/key duplication can be a ##%tch...Common electric, make sure the PM fee includes the placement fee and renewal fees, or bump up your vacancy rate to account for it. If its commercial the closing costs may include an environmental phase I or phase II (the latter more expensive). Snow removal and landscaping, cost of accountant. After this throw in a misc. category.

Patrick Q. · Answer

@Nico Doss

Thanks Nico.

Trying to figure out at the moment if garbage and recycling is covered in the property taxes.

Nico Doss · Answer

Hi Patrick,

Maybe include garbage if not implied in one of the other categories; maybe free WiFi (increase the rent:  cost of Wi-Fi + 15%).  Otherwise, your list seems complete.