Monthly expenses relative to number of units

[Daniel O.]

Hey folks,

So I'm sitting here scanning through real estate listings in Pittsburgh and running quick-and-dirty analysis with the ol' 50% rule as a gauge for expenses. I look at $95,000 duplexes all the way to $1,000,000 6-plexes, and I start to notice that the money just doesn't seem to work out on the more expensive, larger properties, and that surprises me.

Then I realize: "oh right, the 50% rule is meant for single-family homes."

That brings me to my question: how do typical monthly expenses (not including loan payments) scale with number of units?

I would imagine that, as the number of units goes up, the overall percentage of gross income that goes to expenses would in turn go down, if only slightly.

What's your experience? Is there any decent guideline to for rough calculation of expenses with a larger multi-family? What are some conservative average expense percentages that you've observed with your own properties?

Thanks!