Estimating Expense Ratios
I own a couple multi-units and am presently looking at a couple more . Because the information on expenses from realtors and sellers is always understated, I was wondering if you apply a typical expense ratio as a rule of thumb. Obviously this number changes given the property size/type and assumptions you have made. In partical I assume that all non-common utilities are paid by the tenants and that the property has zero vacancy. In addition I included a management fee of 5-10% but do not included an annual reserve. The range in size of building could vary from a duplex to an 8-unit, a 25-unit, 50-unit or more.
If you have made different assumptions simply state them and the number of units as well.
Thanks for your help and insight.
commercial,
thanks. great suggestion. i was not aware of these publications.
The bank might not notice but trust me the new lender will. As will the attorneys or realtors for your buyers. In order to transfer title you will have to have a release of lein from the mortgage company.
Ok, so call it 100 units at $125 per month times 12 months equals $150,000 over 4 years that equals $600,000 in total possible income. $10,000 in uncollected is 1.6%-- not much at all.