Originally posted by @Austin Sine:
Originally posted by @Herndon Davis:
Operations Cost factor exceeding 28%. Why is so much of your revenue eaten up by monthly costs ranging into the 30's and 50% range? When you start digging you realize this may be too much work to undo!
@Herndon Davis Interesting, thanks for the insight. Total operating exp/total income? What line item do you typically see as inflated on the T-12?
If you look at T-12 and see a lot of one off management expenses and excessive accounting and legal expenses that's a red flag. That's not to say they are aren't legitmate charges but if you can't make sense for what they are for, specifically and they pop up with semi-regularity, then something is up. Something else to look out for are utility expenses. Some landlords refuse to bite cost of splitting meters. As a result they pay all utilities without pushing the cost back onto the tenants in a standard payment. I once saw one landlord who paid for ALL utilities PLUS cable and internet!!
His expense factor was pushing 42% ridiculous. Needless to say I wasn't about to touch the deal without finding a way to increase rent or charge a standard rate for utilities without alienating existing tenants.
