Vacancy, CapEx, MX/Repairs metrics when analyzing deals

[Account Closed]

BP Family,

I am poised to have the cash for my first Turn Key (or close to turn key property bought through conventional means), and I have a question about the numbers on deal analysis, as I have been analyzing tons of properties, and want a standard metric to use so I hold my standards.

I have seen people use everything from 5% for CapEx, Vacancy, Repairs, 10% for Property management, and just use real numbers for taxes and insurance (the big 6). I have also seen people just use the 50% rule only. I have also seen folks use 6%, 7%, 8% 10% etc for the "big 6", and any combo of those.

I would like to hear from current property owners with buy and hold rentals specifically about:

1. What numbers do/did YOU use for success (CapEx, Repairs, PM, Vacancy)

2. What is YOUR minimum "go" criteria for (a) Cashflow per door and (b) Cash on Cash return on an investment property (assuming 20% down financed)

Look forward to hearing what other have used with success in their buy and hold portfolios, thanks!

[Mike D'Arrigo]

@Account Closed the 50% rule is nothing more than a quick, back of the napkin way to get a quick idea if a deal will pencil out and shouldn't be used for anything more than that. The assumption you use will depend on a number of factors. Vacancy rate will depend on your local market, neighborhood and class of property. Low end neighborhoods will generally have higher vacancy rates. CAP Ex will depend on the condition of the property and how long you plan to hold it and it's current condition.