Estimating monthly expenses

[Masud Khan]

New rental investor and soon to be landlord here. I’m doing the math on evaluating properties and having a hard time getting realistic monthly expense estimates for a 2 bed/ 2 bath condo and/or townhome.  

So far here’s what I can estimate with accuracy:

-monthly principal and interest payment
-annual taxes (published in MLS)
-insurance (around $950 annual)
-HOA/condo fees. (Published in MLS)

Here where I need some help:

-what is a good annual maintenance and Capex budget?

-vacancy?

-when evaluating a property, do you factor these expenses into your monthly cashflow? Meaning, should your rent also cover maintenance, upgrades and a vacancy amount?

All help would be hugely appreciated!

[Scott Hibbert]

@Masud Khan Is the place newly renovated or outdated?

I think the BP rental calculator says a good estimate is 5-10% for vacancy, 5% for maintenance and 5% for Cap Ex.  If its outdated then it should be closer to 10%.  Yes you will want to include them in your monthly expenses against cashflow.  It spreads the expected cost out over every month, even though when they happen, it usually is just one larger cost for that one month.  You'll want to set them aside in savings until your reserves are high enough to cover an unexpected costs.