Too much set aside for expenses?

[Nick Causa]

Hey all, my wife and I have been looking to get into a multi family and house hack closer to work. I don’t know if its because we live in an EXPENSIVE area or because we’re trying to FHA a multi so the monthly debt service is astronomical, but every deal I analyze comes out cash flow negative. Am i putting too much aside for expenses causing every deal to look like a bad one? Or is the market just that expensive right now haha. Heres how i have a spreadsheet of mine broken down: Expenses per month: Maintenance: 5% of rent Management: 8% of rent (for after we move out) Vacancy: 5% of rent CapEx: 10% of rent Lanscaping/snow removal: $100 I know every case is different but whenever i run the rent through these expenses and then take into account PITI I come out negative. To give an idea multis around here go for $575k+ and taxes are hardly ever less than $11k. Rent estimates are just around $2300 for 2 bedroom 1 baths.

[Jeremy Taggart]

@Nick Causa You might want to go by dollar amounts rather than percentages since your rental income is so much higher than the rest of the country. Besides property management of course. I don't think you need to go over about $200 a month each for capex and maintenance unless it's a very old home or in less than ideal shape. You could probably adjust the vacancy down as well since I'm assuming the rental demand is pretty high in your area based on house values. Think about the whole house hack situation though. Yeah it'll be nice living there for cheaper while you are living there, but then when you want to move out and live in a single family, it will be a cash flow negative asset that you own if you plan to keep it. Unless you are banking on appreciation. Might make more sense to sell it and invest somewhere more favorable for cash flow once you wanted to move out.