Advice on a 6-Unit Multi-family deal I am evaluating

[Harsh Singh]

Hello BP community,

I am looking at  deal in my local market that's priced at $425K. This property will need about $75K in rehab and the market rents would increase between 5% and 8% once the rehab is done.

I am trying to figure out what expense ratio to apply to this opportunity. Does the 50% rule include only operating expense, or does it also include debt coverage and taxes as well? Also, what's a realistic operating expense ratio for a 6-unit multi-family deal? I feel like a 6-unit compelx is not as difficult to manage as a 10 or 20 unit complex.

Can someone please provide some insights?