Modeling expenses & capex, best ways to estimate?

[Neil Quinn]

Hi all,

I'm looking at buying a primary residence with a goal of renting it out when I leave the area.  This is a high COL area though (DC/NoVA), so trying to get a rough sense of how much negative cashflow I'd have when I leave.

Vacancies, prop management, insurance, etc are all pretty easy to estimate, but I have no idea how to properly estimate capex.

For example, let's take a theoretical older property:

PITI:  $400k condo @ 5.75% interest rate, 20% down. $150 HOA fee.

Assuming 1% property tax, $800/year insurance, no PMI = $2417 per month

Income: Expected rent of $2200 ($26.4k per year)

Expenses:

- 8% vacancy (-$2112)

- 8% prop management (-$2112)

- How much for capex/maintenance? A $3500 hvac unit over 20 years is only $175 per year. Roof would be covered by HOA. Dishwasher/refrigerator/washer/dryer is maybe another $175 per year. Misc small repairs of $500 per year? That puts capex+maintenance at $850, which is a lot smaller than the 50% rule which in this case would be $1200. (-$500)

- Maybe $1k per year in marketing/legal fees (-$1000)

Total delta would be $26400 - $2417*12(PITI) - $2112 - $2112 - $500 - $1000 ~ -$8k per year, not accounting for any depreciation benefits.

Does this look in the ballpark of what I'd expect?  Go higher or lower on capex/maintenance?