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Property Expenses

Discussion in 'General Property Chat' started by Propertyman, 3rd Aug, 2016.

  1. Propertyman

    Propertyman Active Member

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    Sydney
    Hi guys,

    I am trying to make a spreadsheet which shows my future cash flow position based on future purchase assumptions etc. Is there a rule of thumb for property expenses? a % of rent?

    I listen to the Property Couch and they use 1.5% of the purchase price (indexed at 3%) for property expenses (excluding management). Does this seem fair or is this too low you think?

    Thanks in advance
     
  2. ashish1137

    ashish1137 Well-Known Member

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    Consider 13 wells of rent as an expense. Figure out the rest. :)
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I use 25% usually.
     
  4. Blacky

    Blacky Well-Known Member

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    I generally assume 30% of income.
    Ashish uses 25%

    Pretty close.
     
    Terry_w likes this.
  5. Propertyman

    Propertyman Active Member

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    Great thanks for the feedback
     
  6. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    The problem with using a function of the purchase price is that it doesn't scale well in many instances. Rates notices in cheap areas aren't proportionately linear to those in expensive areas.

    Most lenders use a function of the rent, 20% - 30%. I go with 25% myself.
     
    New Town likes this.