Help w/ deal analysis assumptions

[Lindsay Denny]

Hi all,

I'm practicing analyzing rental property deals (duplex or triplex) and am curious if my #s sound right, specifically in Philadelphia. I'm looking in West Philly (west of the universities)....would love feedback on the following thought process:

Repairs & Maintenance: 10% 
- Using a mid-range % as I'm not looking at properties that are in a crazy state of disarray 

Prop Management Fees: 10%
- Managing myself initially but building in this cost for later

Vacancy: 8%
- I called a bunch of property management companies in Philly...most couldn't tell me any average at all, 2 told me vacancy was literally non-existent, and some said 7-10% depending on neighborhood/property. 
- TD Economics report the current Philadelphia vacancy rate at 3.7% and projected it'll increase to 4.4% in 2017. I understand that this is across the whole city, but it still sounded really low: 
http://philly.curbed.com/2016/2/5/10941202/philade...

- Thinking there may be averages based on whether it's an A, B, C or D neighborhood, but I couldn't find any current info to this detail

CapEx: 8%
- Struggling with this one as I'm not doing a detailed analysis until I view specific properties, but I want to use a % when quickly sorting through opportunities

Rental income increases/year: 1% (super conservative)

Property value increases/year: 2%

Expense increases/year: 1%

Any feedback would be much appreciated! 

[Jay Dewberry]

Hi Lindsay. From my experience, the numbers are going to vary for each deal analysis. That being said, in general, it seems to me that you are in a good range with you figures. IMO, I usually like to see about a 9-12% range on my CapEx, but it seems to me that you are on the right path. Keep up the analysis. Good Luck.