Los Angeles opex rules of thumb?

[Jon Schwartz]

Hi all,

Angelino new to the LA market here. After focusing out-of-stage, I'm determined to make the LA market work for me!

What percentages do you LA investors use when estimating opex while underwriting a property? I typically use 10% for maintenance/repairs and 5% for capex in cheaper markets, but I feel like those percentages must be lower here.

Any input would be appreciated. Thanks!

Best,

Jon

[Lee Ripma]

@Jonathan Schwartz

As others have pointed out it depends on how new your construction is. Brand new construction or down to the studs rehab is very different from a 1940s original plumbing. This is why you want to do actual numbers on capex. This many water heaters that last this many years. This many roofs that last this many years. Etc. there is actually a real cost rather than a percentage. Percentages can be very misleading.