Posted by Jonathan L on July 15, 2008 at 21:28:17:
Purchase price is $2.3m. It’s 95% vacant because the current owner did a full condo conversion and then the market dropped out. They’ve been appraised at $79,500 as individual townhouses, but anything over about $44k is gravy.
My goal is to lease it up over two months via a leasing specialist company, refi, and hold for cash flow until I can sell them as townhomes.
Thank you very much for the help.
Expense Ratios - Posted by Jonathan L
Posted by Jonathan L on July 15, 2008 at 13:27:22:
I have under contract 61 apartment units in Charlotte, NC (building and area both class C). The gurus whose courses I have bought say 50+ units will have expenses of at least 50% of the gross collected rent. I have spoken with local owners who comfortably run about 35% expense ratios, but the gurus say otherwise. I am wondering if anyone has experience with this size building and might be able to offer ballpark expense ratios for a stabilized class-C building of this size?
When fully leased, here are my numbers:
Effective Gross Rent (5% vacant at $550): $382,470
Taxes: $25,161 (actual)
Insurance: $17,000 (actual)
Management (7%): $26,773
Maintenance: $38,247
Trash: $12,000
Non-Payment: $11,474
Electric: $5,000
Legal: $5,000
Total: $140,655 (37%)
NOI: $241,815
Are these reasonable numbers?
Thank you very much for the consideration.
Re: Expense Ratios - Posted by Pistolpete
Posted by Pistolpete on July 30, 2008 at 04:34:55:
That 50% the “gurus” quote probably includes heat & hot water. Looks
like tenants are separately metered at your place.
Re: Expense Ratios - Posted by John
Posted by John on July 22, 2008 at 05:19:56:
National averages are 7% Vacancy, 7% management 36 % expenses. This is a quick rule of thumb. Reality is … the variences regionally. In NE Ohio I can run a class A on 28% expenses (+V & M), but there is NO deferred maintenance. In a C class complex you can have over 70% maintenance easily. Break out your capital expendetures for rehab but in a “C” area your tenants are likely to be “C” quality so maintence remains high. Management will typically be higher also due to chasing tenants.
Re: Expense Ratios - Posted by Casey
Posted by Casey on July 15, 2008 at 21:17:20:
what is the purchase price?
Re: Expense Ratios - Posted by Young Success LLC
Posted by Young Success LLC on July 15, 2008 at 17:31:49:
Ive seen some buildings run 30-60-80% There are many factors to consider. Varies by market, type, particular expenses, year built… The best thing I would recommend is if its under contract, hopefully you have some good backout clauses in there. I would make sure to verify everything during your financial due dilligence. That would be key in your evaluation. Good luck on your REI journey. Im getting started with similar properties, feel free to contact me and maybe we could help each other out.
Re: Expense Ratios - Posted by James R. Cundiff
Posted by James R. Cundiff on July 15, 2008 at 15:24:06:
You might try the Institute for Real Estate Management (IREM). They publish income and expense figures for most markets in the country.