Calculating monthly expenses

[Mike Bovay]

How do you conservatively estimate monthly expenses? Is there a “standard” percentage to use as a rule of thumb? I’m looking at a 6 unit property and trying to do a quick estimate. (I realize this won’t be a substitute for doing my due diligence and seeing the actual numbers). Thank you in advance.

[Theo Hicks]

Hi Mike,

50% to 60% is a good estimate to estimate an NOI. But always have the actual numbers before submitting an offer.

To estimate the mortgage payments, assume a DSCR ratio of 1.25%. So, debt service = NOI / 1.25