Pro Forma calculations. %-ages off Gross Rent or Operating Income
Do you use Gross Rent or Operating Income (Gross Rent - Vacancy Losses) to calculate your expenses?
For example:
$1000 monthly rent.
8% vacancy
$920 gross rent.
Property Management 10%
$100 or $92?
Most Popular Reply
I would use the $92. You are only paying management when the property is rented. However, be sure to account for a placement fee if your manager charges it.
In my situation I figured that my units turn over every 2 years, so I turn half a year. My manager charges me 8% for management and 1/2 month's rent for placement. So, 1/2 months rent over 24 months per unit.
At $500/mo rent - $250 placement fee/24 months or about $10/month per unit.
Its not exact, but it helps in my analysis.