What percent are you using for maintenance, vacancy, PM, etc???

[Aaron T.]

I am using the BP rental calc to evaluate properties for potential rental performance. What numbers is everyone using for their expenses?

I am using:

Vacancy- 6%-8% this gives me one months rent at 8% or just enough to usually cover PITI at 6%

CAPEX- 5% - If i were to have to replace a roof at 15 yrs, $8k roof/ 15 yrs = $533 yr /12months = $44 a month for CAPEX.

Repairs- 5% - for the unknown or unexpected repairs

Property Management- 12% - If I need PM to place and manage a property for me. 

Thoughts?

[Brie Schmidt]

I use:

8% vacancy

8% repair

5% capex

9% management

We have been in crazy growth mode but once summer hits we should be stabilized and done acquiring.  I feel these numbers are conservative and we budget $65k a year for vacancy, repair, and capex.

My plan is to transfer a fixed amount of profit into our personal account each month.  Then capex and any money not spent on vacancy and repair that month goes into a savings account (or if we overspent one month we will pull from the savings account to make up the difference in profit).  At the end of the year what is left we will  plan to spend on bigger proactive projects.  So if a roof will need to be replaced in a year or two we will do it now.  If we have an old furnace instead of waiting for it to die we will replace it now.  

This way we will avoid big ticket surprises and not get comfortable living off extra profit.