Estimating Expense Ratios
My apologies for those who read this post yesterday in the multi-unit section. Maybe this forum is more appropriate and will receive more responses.....
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 include 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.
Why do you have to make any assumptions? You already own a couple of multiunit properties, so you should have empirical data at your fingertips.
What are your current expenses, your current vacancy rates, and what are they as a percentage of your effective gross income? Why not apply the expense ratios from your own market experience to another multi-unit property in your market?
Sometimes, you need the forums so someone else can tell you how to see the forest for the trees.
When you get to the point where noone has to tell you, then you come back and tell others.