What are some realistic tenancy terms and maintenance costs (turnkey)?

[Rafael Ro]

Hello all,

I'm trying to analyze deals by plugging in the numbers into a spreadsheet, but I'm struggling to figure out what numbers to use for vacancy and maintenance?

Specifically, some of the deals I'm considering come from established turnkey companies (very reputable in these forums) that have been around for a long time and they claim very long tenancy terms. 

One of them is claiming an average of 3.8 years (they deal in C class neighborhoods), and the other one is claiming 6 years or more (B- class neighborhoods). They're saying that's "average". 

Furthermore, since these are turnkey companies and praise themselves on their renovations, the B class turnkey is using only 2% of rent (which averages around $1500/pm) for maintenance, and the C Class turnkey is using 7.5% of rent (avg about $1000/pm) in their calculations. They argue that the first few years maintenance would be insignificant since the properties are renovated, and so you're essentially stashing that money away for the future maintenance needs. 

Do these numbers sound at all realistic? 

Obviously every market is different, but what have you seen in your experience? Consider that a few big expenses (ie. roofs, HVACs, etc) are often taken care of for a little while, since they are replaced as part of the reno in a few of these example properties.

Thank you all in advance!