What is the estimated monthly cost of a 7-unit apartment building

[Jun Zao]

I am currently looking into a 7-unit apartment building on RedFin.

Location: Chicago IL, North Lawndale, low income, high crime neighborhood.

Asking price: 450,000

Total monthly rent income: 7162

Well maintained (so claimed)

What should I expect the monthly average combined costs for [ vacancy + maintenance + eviction ] ? 

[Mark Ainley]

@Jun Zao The first red flag is make sure that 7th unit is legal...knowing the Chicago housing stock most of the 3rd, 5th, & 7th units were units added on you want to make sure they are legal.  If you want a source to check out send me a message and I will share with you.

Lawndale is rougher then most areas so you must make sure you are good on your numbers.  If I were you I would find your property manager before you go any further so he can advise you even more.  

• Management 10% - The top managers know what it takes to manage here so they will charge you 10%.  
• Maintenance - 12% - If your numbers work at 12% then you are good
• Water - $50 per unit per month - If more then this you have a usage issue or a leak.  This doesnt account for $9.88 water charge per unit per month.
• Garbage - Since it is over 4 units you need to hire your own service which if you hire Flood Bros they can get you a 2 yarder twice per week for about $120 plus fees.
• Vacancy - Run 10% on your numbers just to be safe.
• Lawn - you can go on a place like taskeasy.com to estimate this cost.  
• Snow - Figure $85 per month for 8 months.

Know these answers to the following questions for this building your are buying:

1. Are there any open court cases or violations?
2. Are the water supply lines copper or the old galvanized pipes? 
3. What is your breakup between CHA and market tenants?  
4. What repairs have been done on the roof?  Have a roof contractor check it out..."work done to the roof" means so many things in this city.  
5. Sewer line - I have the sewer camerad during your due dilligence.

Feel free to reply back with any further questions publicly or privately.