All Forum Posts by: Matthew Jure

Just discussed something similar the other day. Hopefully this link works. CapEx Calculation Controversy on the BiggerPockets forums http://www.biggerpockets.com/forums/12/topics/586399-capex-calculation-controversy I'm also a newbie, but I'll share what I determined. I'm conservative with my numbers and use a $200 per door CapEx until I can get accurate numbers. Then I'll do it as a line item of annual depreciation. I'm in the Cleveland metro. 15% property management, 8% maintenance, $40 per person for water, 8.3% vacancy, taxes from the county site, and insurance. Not sure if it would be different in your area.

@Nick Causa

I'm about to get on a soap box for a minute - save up for an emergency fund. I just hit this week with an unexpected $10k in CapEx. Long story short, the previous owner of my property pulled a fast one on me and it caused problems 5 years after I bought it.

Anyway, I only have one rental that I live in so take it for what it's worth, but I agree with @Alan Rohrer. An emergency fund is a self insurance policy against losing EVERYTHING when you have a problem. Many who agree save about 6 months of mortgage payments as a rule of thumb. However, I see many investors use credit cards as their emergency funds, but spread across enough time you WILL have an emergency and therefore you WILL use your credit card. My philosophy is that I can always go into credit card debt and pay 20%+ interest to them in an emergency, but I choose to have an emergency fund and pay the price of losing to inflation (~3%) instead. It also lowers my risk and gives me more options. To quote Warren Buffett, "You only find out who is swimming naked when the tide goes out." What I take from that is you never see who is financial stable until there is a problem. Better to be ready for it with a solid emergency fund than risk it all. I feel better now that I got that off my chest :)

@P.J. Bremner

I will keep that in mind. I only have 1 double now but searching for my next property every day. Thanks!

I was looking an 7 unit and an18 unit in Lakewood. I also saw a 21 unit in Cleveland (44109).

Does anyone know if the insurance gets cheaper (per unit) the more you have?

@P.J. Bremner

That's a drastic change in cost. Are you using a broker?

@James Wise

That helps. I occupy my current double.

Look at Holten-Wise. They have a big online presence. I know they've had turn-key in the past. I believe James Wise did a podcast on bigger pockets a while back too.

http://www.holtonwisepropertygroup.com/property-search-for-sale/ 

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Is there a rule of thumb to estimate property insurance on a multi family without going to a broker/agent? I'm in Cleveland, Ohio if it makes a difference. There has to be a way to some kind of ballpark estimate.

If you replaced CapEx items when you bought your property then you may be close to peak value. Your CapEx items will start to become worn and need to be replaced. Some suggest getting out before the age/wear goes against the property. At 5-7 years everything should still look pretty good and have a couple good years left. Therefore, max value. Go much past that and you will have to start to replace items. I'm a newbie, but that is what I'm told.

I have hardwood in the upper part of my double with a very large throw down carpets in each room. It keeps the noise to a minimum and still has the appeal of hardwood. Very easy to replace since you just need dimensions!