First deal - estimating maintenance and repair costs

[Yahav Caine]

I'm in the middle of a negotiation of my first deal. It's a 1963 multifamily 4plex brick building. Total of approx 3500 sf. This is a low income neighborhood, I'm not sure if some of the tenants are section 8, I'll know that only if we go into escrow. The seller said repairs and maintenance are $1500 a year, which sounds a bit low. I budgeted $4000 (a year). The difference in this cost I did, pretty much make the deal a lot tighter for me based on the price he wants - leaving me on a 8.45% cash on cash (25% down).

My question is did I overbudget this or is that a decent cost for repairs in such a building?

[Jim Adrian]

@Yahav Caine

When the furnace dies after 20 years or the roof  is past its useful life you cant make the tenants pay for it because they didn't break it.  These are owners responsibilities for example.  These are big ticket times and you want to have money put away to replace them.  You might want to take a look at this website to give you an idea how long items last.

https://www.nachi.org/life-expectancy.htm