My calculations:_________________________________________________________Income:4 Mobile homes X $350 lot rent = $1400/month $1,400 X 12 = $16,8001 2bed/1bath house X $650 rent = $650/month$650 X 12 = $7,800Total Income = $24,600___________________________________________________________Expenses *Estimated:Taxes = $1,750 YrInsurance = $1,500 Yr*Landscaping = $1,200 Yr*Utilities = $850/month = $10,200 Yr*Maintenance = $25/month X 5 units = $125 X 12months = $1,500 Yr *Capita Expenditures = $35/month X 5 units = $175 X 12months = $2,100 YrTotal Expenses = $18,250_________________________________________________________Net Operating Income:Total Income / Total Expenses = Operating Income Percent$18,250 / $24,600 = 0.741 - 0.74 = 0.26 = 2.6%Net Operating Income Ratio = 2.6%______________________________________________________Cap Rate with current asking price:Cape Rate = NOI / Property ValueCap Rate = $6,350 / $260,000 = 0.025Cap Rate = 2.5%___________________________________________________________Cap Rate with $100,000 offer:Cape Rate = NOI / Property ValueCap Rate = $6,350 / $100,000 = 0.0635Cap Rate = 6.4%__________________________________________________________Cap Rate with $60,000 offer:Cape Rate = NOI / Property ValueCap Rate = $6,350 / $60,000 = 0.1058Cap Rate = 10.6%_________________________________________________________Cap Rate with $75,000 offer:Cape Rate = NOI / Property ValueCap Rate = $6,350 / $75,000 = 0.0846Cap Rate = 8.5%

Hi, when i evaluate a property I generally put 10% monthly expense for repairs and maintenance and 7% for Capex expenditures to determine if a property is a possible buy.

I think you need to annualize capital expenditure projections and add that to your expense ratio.

Believe me, this is the tip of the iceberg in terms of the expenditures you will put out for improvements and maintenance.

Fixing things that break aka maintenance and also replacing things that are at end of life like a roof replacement also called cap ex (capital expenditures).

How do you treat historical capex of a property in your own valuations of a property?In theory, one could argue that the average historial capex (both maintenance and expansionary) per year for a time period of 5-20 y...

(Repairs, Utilities, Insurance.....not mortgage, not capital expenditures)It is an easy way to create an apples to apples comparison of the risk involved in an asset and market.

It also makes certain capital expenditures, such as roof repairs, can be "lumpy" in that they can be large in one year and non-existent in the next (although they're guaranteed to occur if you own property long enough).  

At this rate, I am barely putting any money in my pocket, but my housing payment is completely eliminated and I am able to set aside $585/mo for vacancies, maintenance, and capital expenditures. 

7% vacancy rate, 10% repars,10% capital expenditures, and 5% management company fees.