Quote from @Robert-Lee Pass:
I do have a question as far as the water heater, and other cap ex items. isn't that covered by a warranty or insurance?
whats vacancy rate do you use when running numbers on things? how do i get an accurate or in the ballpark number if im self managing and its my first time
No, insurance doesn't cover routine wear and tear. It's for loss *events*, and would rarely every apply on an appliance with a limited lifespan. You can pay extra for a home warranty that covers some appliance repairs/replacements, but they're obviously counting on you paying more in premiums than they'll ever pay in benefits.
We've had some nasty hail storms the last several years, but roofs are typically more of a 15 year item. Hail coverage is unfortunately getting really expensive (like $5000 deductible).
As for vacancies, call around to multiple PM companies and ask about economic vacancy, not just physical vacancy. Economic vacancy includes anything missing from the gross potential rent, including both actual vacant periods and unpaid rent in occupied units. Commercial lenders, for example, usually assume that even an apartment building will fall at least 5% short of gross potential rent between physical vacancy and nonpayment.
You also have to consider the PM company's number of units in the area - a very small sample size isn't going to tell you much. You might also ask if they can break it down by subsidized vs unsubsidized. People with permanent housing vouchers tend not to move often, so you should compare vacancy in both property size, type (detached/apartment), and payment source as much as possible.
Generally, you might want to consider just sitting down with your insurance rep/broker and your own household finances to get a handle on what's covered and what you're seeing for expenses in your own home. For other replacements and cap ex, you can look up the typical useful life of any appliance or home feature and just do the math on replacement costs with inflation over 5, 10, 15+ years.
