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Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 9483
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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i am thinking about owning a 10 unit apartment bld in s.california.

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i am thinking about owning a 10 unit apartment bld in s.california. all units are self metered for all utility and rubbish,sewer etc. IS THERE A general guideline as to the percentage of the total income that will probably be allocated to maintenance,repair-rent-redy expenses??? marty

Lane :

Hi, for TAX purposes, this is what IRS calls a "facts and circumstances? test .. it's really all over the board, depending on things lie age of the property, income level of renters (high-rent district vs low-rent district - income strata kind of thing) what will really matter from a tax [perspective is the numbers are real (what you paid for paint, you paid for pain) ... but in terms of planning and cash flow forecasting the best data will probably come from IREM ( the institute for real estate management) ... give me a few minutes here and I'll see what I can find

Lane :

I did JUST stumble into this, on rent increases from them (Chicago) but again hang on juuuust a minute

Lane :

Aug. 22, 2013


New Income and Expense Data for Conventional Rental Apartments Reported in IREM Benchmarking Study

Chicago—Gross possible rents for the four conventional rental apartment types examined (elevator; low-rise with 12 to 24 units; low-rise with 25-plus units; and garden) rose within a range of 1.6 percent and 4.0 percent in 2012 versus 2011. Total expenses for all four building types experienced year-to-increases ranging from 2.5 to 6.2 percent.

Lane :

NET INCOME EXAMINED
In terms of net income by subsidy type, Section 202 building categories in 2012 ranged from $3.79 to $7.40 per square foot; Section 221(d) 3 buildings ranged from $4.74 to $6.56 per square foot; Section 236 buildings ranged from $2.94 to $4.14 per square foot; Section 8 Elderly/Handicapped buildings ranged from $4.84 to $7.25 per square foot; and Section 8 Family buildings ranged from $4.41 to $5.88 per square foot.


OTHER STUDY HIGHLIGHTS



  • Utility costs for federally subsidized multifamily buildings were both up and down in 2012 from the year earlier. Increases ranged anywhere from $0.02 to $0.70 per square foot whereas decreases ranged from $0.02 to $0.39 per square foot.

  • Section 8 Elderly/Handicapped garden buildings reported the lowest utility costs at $0.78 per square foot. Section 202 elevator buildings reported the highest such costs at $2.63 per square foot.

  • Maintenance costs (costs include security and grounds maintenance, but excluding general maintenance payroll) for all building and subsidiary types, decreased last year from the prior year. Section 221(d)3 garden buildings reported the lowest maintenance costs at $0.33 per square foot. Section 202 low-rise buildings reported the highest maintenance costs at $0.99 per square foot.

  • Elevator buildings reported median net operating income ranging from $4.14 to $7.40 per square foot; low-rise buildings ranging from $2.94 to $4.84 per square foot; and garden buildings ranging from $3.82 to $7.25 per square foot.

  • With regard to turnover ratio during 2012, federally assisted properties reported the number of new tenants moving into their building to be 14 percent of total apartments in an elevator building, 27 percent in a low-rise building, and 24 percent in a garden-type property. Conventionally financed apartments experienced a turnover rate ranging from 40 to 52 percent.

  • In terms of operating ratios (the total of all expenses divided by total actual collections and expressed as a percentage) those for all Section 202 buildings increased. The highest operating ratio, 75 percent, was reported for low-rise Section 202 buildings; the lowest operating ratio, 41 percent, was reported for garden Section 8 Elderly/Handicapped buildings.


- See more at: http://www.irem.org/about-irem/media-resources/PR-08272013#sthash.IXFXTN2v.dpuf

Lane :

Hope this helps

Lane :

You'll have to pay if you want the full report,,, BUT at this price and to get truly scientifically obtained and filtered data, it might be worth it. (see the link I provided)

Lane :

Now, let me see what elseI can find for you

Lane :

This one also look very good (and recent data)

Lane :

Sorry, I meant to link this one: (this executive summary is free)

Lane :

This one breaks out the numbers by market .. should be VERY helpful

Lane :

He markets were broken down into regions as follows:

Lane :

EGIONS USED IN SURVEY
Region I CT, DC, DE, MA, MD, ME, NH, NJ, NY, PA, PR, RI, VA, VT, WV
Region II AL, FL, GA, KY, MS, NC, SC, TN
Region III IL, IN, MI, MN, OH, WI
Region IV AR, LA, OK, TX
Region V CO, IA, KS, MO, MT, ND, NE, NM, SD, UT, WY
Region VI AK, AZ, CA, HI, ID, NV, OR, WA

Lane :

I truly hope this helps

Lane :

Let me know if you have further questions

Lane :

Lane

Lane and 2 other Finance Specialists are ready to help you

Hi Martin,

... just checking back in HERE, as I never saw you come into the chat.

Let me know if you have further questions.

Lane


Thanks so much, Martn!

Lots of good informtaion there.

I worked for a large Limited Partnership multi-unit sponsor for five years, (multi-family, Hotels and retirement villages), as a porftioil manager.

...never ceased to ne amazed at the wealth of information through IREM.

Paying attention to them really helped us to "dodge some bullets."


If you'd like to work with ME again just say "For Lane only," at the beginning of your next question.


Thanks again,

Lane