Dialing in my proforma

[Ian Kisbert]

I am a new investor trying to dial in my proforma so I can start analyzing deals better and I have a few questions about where to add certain items.  I am looking for 2-4 units with a value add component to the deal.  Any help is very much appreciated.

1.  Where do I add security deposits, (under income, expenses, or turnover costs)?  Does this get factored into vacancy at all, or possibly somewhere else if there is a value add component to the deal and current tenants will be vacating and get replaced by higher rents?

2.  Utilities - if a property is showing that the landlord is paying for all utilities, how much can be passed back in RUBS, and how quickly can this happen?  Would it be safe to assume about 80% of water, sewer and trash can be passed back as RUBS income right after you close on the deal, or does it take time to implement.  Also, can gas/electricity always be paid for by the tenant, or are separate meters necessary to do this?

3.  Renovation costs - If the deal is requiring renovations to be done, would that be added to year 0 capex, then year 1 starts as soon as the renovations are done?  If this is the case, would you add higher assumptions for vacancy in the very beginning of year 1 in case it takes a while to fill the units that were just vacated due to the renovation?