Multifamily Repair Budget per unit

[Mike Ball]

I am under contract for my first multifamily deal, a 20-unit property in Charleston MSA. 

I am doing some forecasting and wanted to get some thoughts on what people budget annually per unit for repairs (including unit turns but excluding $300 of CapEx reserve). I know the exact number may depend on many factors such as age of building, quality of units and so on, but would be great to get people's thoughts on where they shake out usually.

Thanks!

[Ben Leybovich]

Originally posted by @Mike Ball:

@Sam Grooms thanks Sam! What factors would make the difference so big between those markets? The wages can not be 40-50% different between the two markets.

 Mike, most of the cost will be in property taxes, insurance, and maintenance (due to weather). For example, I can buy a 100-unit community with a property tax bill of about $50,000, or $500 per door. That same community in your neck of the woods is likely to come with a property tax bill of $120,000 - $150,000, which could add as much as $1,000 per door to your overall OpEx. 

Next, insurance. I pay about $150 per door. You are likely to pay closer to $300 per door. Why? Because your pipes freeze and mine don't. Because your topography is hilly, which means water issues, while I'm in the desert - flat and dry. Because your sewer infrastructure is older. Etc. 

The R&M budgets will reflect similar realities. If you have a flat roof in an environment which experiences lots of rain, boiler, chiller, snow, etc. it simply costs more to keep up.

So, what we have in the end is that it may cost me $4300 per door to run my apartments, but it may cost you $6,000 per door to run a similar community.