All Forum Posts by: Dennis H.

I work for a PE company so everything is class A and on the west coast.....Definitely skewed. However, a 50% expense ratio would have me excited. That is a mismanaged property and an opportunity to come in and add value that goes straight to my pocket book.

Well come to Texas then. You have an entire harvest of 50+% expense properties for you to reap. You'll make a fortune bringing them down to 35%.

Typically, you can bring them down 5-7%. 15% would be awesome!

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Originally posted by @Todd Dexheimer:

@Dennis H. perhaps expenses are cheaper where you are investing. For others out there I would orientate yourself with the market you are in by looking at a lot of deals, talking with brokers, property managers, other investors and lenders. I am just going with my portfolio and my experience analyzing deals. I have researched over a dozen markets and have never found 40% to be a good rule of thumb. I don't own a single property with deferred maintenance - in fact I usually go over board during my initial Cap improvements - and all run at between the 50-60% expense to income ratio. Most brokers I work with use 55% as their general rule (these are B and C class areas with little to no deferred maintenance).

I dont know a lot about your investing, but Im guessing it is a low number of units and in the Midwest. Great example for everyone on how markets are different everywhere you go.

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Originally posted by @Todd Dexheimer:

Originally posted by @Dennis H.:

55% expenses - yikes! A well run property should be under 40% and preferably, closer to 35%. Perhaps an opportunity there for you.

Please don't use 40% on a class C property to determine NOI. 55% is the minimum unless it is new construction. Even Class A over 10 years old I would not use 40% unless tenant pays utilities.

I vehemently disagree with this. The only reason for it to be that high is if there is a ton of deferred maintenance.

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What kind of ADR & Revpar rates are you looking at? Also, with the struggling CMBS market, how did you find the process of getting a loan?

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Is there a property manger in place or are you going to be it?

How long are the current leases in place?

1 Vote

All Forum Posts by: Dennis H.

Dennis H. has started 1 posts and replied 30 times.

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