25% expenses on Multi Family

[Jordan Vires]

Do any multi families actually operate with only 25% expenses in relation to gross rents. I made an offer on a multifamily property and used 50% rule as a guideline. The realtor's response was.....

" Vacancy rate, is less than 10%. Most of the time there is a waiting list and vacancies are filled as soon as the unit is cleaned and or painted if needed. As far as expenses he said 25% was a huge amount ti figure so not sure where we go from here, we seem to be do far apart."

Should I stand firm on 50% ? I thought I should. However they act like this is some special situation where even 25% expenses is high. Anyone ran into anything like this? I figured they are are stating this to justify asking price that is way too high!!

Thanks

Jordan

[Joe Fairless]

@Jordan Vires the 25% is not accurate. New construction for a Class A community might run 40% and it goes up from there based on age, condition, bill backs (or lack there of), amenities and any # of other factors. Stick to 50% and you might find it's closer to 60% than 50% after looking at the #s.