Oregon Property Expense Eatimates for Analysis

[Cameron Hunt]

Morning All!

Wondering if any real estate veterans can help me hone in on expense estimate number for deal analysis. I know I will want to be more detailed than this, especially (I would imagine) on the capex side.

I’m just looking for starting numbers I should be using in my analysis. I’ve read that I should use the following assumptions:

5% vacancy

10% Prop Mgmt

10% Capex

10% Maintenance

Every deal I’ve looked at comes up with negative cash flow using these assumptions. So am I using the correct assumptions and just not finding deals? Or are my assumptions too high for this area. I am looking in the Willamette Valley (Salem to Eugene) as well as is in Central Oregon (Redmond-Bend-Sisters). Also in Kelso, WA.

Primary interest is 2-4 plex.

Thank you for any insight!

[Steve Morris]

10% CapEx seems kinda high UNLESS you've got some known stuff coming up (like siding windows roofs) and it should be offset by a RESERVES number on most calcs. Reserves are usually like $250/unit/year

10% maint is also high (especially in light of 10% CapEx). However, it's a profit center for PMs, so I'd do a forensic on that to see if real or not. New units maint should be very low. 70s vintage place - $500-$750/unit/year?

10% Prop Mgmt - If its a SFR, then 12%. If >5 units, I'd be more like 8%. If you have an onsite then min of 30 units or about 3% (assuming they get free rent). SO for 2-4 units, get a couple of quotes.

5% vacancy is about right, but with collections now, economic vacancy is higher.

Think I'd just get a real rent roll and then figure expenses = 45% of gross or about $5K-$6K/unit/year.  Then you can put in the mortgage to get a CFBT which is what I'd use to sort stuff out (Cash-cash return).