Real Estate Analysis

[Jacob Zivanovich]

Hey there! 

So I typically run my numbers with 15% set aside for vacancies, repairs, and cap ex (5% for each). However, with margins being low, is it okay to use less than 15%? 

Say I run the numbers and I get a -$50 on my Coc return (I know there are many different metrics of success), but it's a newer build with new appliances and a popular area where vacancies are low. Is this too close of a call? What do you think?

To answer my own question, I think that although you could, it is wise to stay away from this and search for something better.

Thanks!