Calculate certain Rental expenses

[Devang S.]

Fellow BP colleagues,

So I've question on analyzing properties. I understand the answer may be it all depends, and that's okay, but wanted to understand the reasoning behind some of the unknown expenses, how you go about it. 

Specifically my question is related to the expenses related to repair, supplies, capex and vacancy. How do you go about them when analyzing the deals? Do you assume certain % of rent or some absolute numbers for initial pass? 

Of course, it depends on the property condition, market cycle, neighborhood, location etc. but assume there is some conservative guidelines that you may be using for the preliminary go/no-go analysis. Sure, some people would say this is backward, meaning you have to zero in on the area and understand as much about it as you can first, before even looking around to buy anything, but believe at some point they also need to come up with some rough numbers for these unknown expenses. Interested in your thoughts!