Property Expenses

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

 

Consider 13 wells of rent as an expense. Figure out the rest.

 

I use 25% usually.

 

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

Pretty close.

 

Great thanks for the feedback

 

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.

 

My cheapies in QLD regionals on $250- $300pw rent can ezy run to 40%.

Hence big gross yields of 8% plus barely breakeven after high rates, high PM fees, high insurance etc etc

 

I think that is a biggie to consider.

• Unit and apartments tend to increase budgets.
• PMs usually charge 5 or 6%, i think.
• Maintenance, I prefer newish house. Rather I have bought all land and houses till now. There is no old property in my portfolio.
• Depriciation on new houses is an added benefit (nearly 1% increase in yield).

Hence, I am taking the standard of 25% or 13 weeks of rent. Even though, I think it should be less than that but who knows for sure?

Regards