About California Single Family Acquisition, Closing(Disposition), and Carrying Costs?
I know this is the 'commercial' real estate subreddit but people here seem much more knowledge/professional while /real estate is mostly a bunch of amateurs. I will ask this exact same question for Commercial/Multifamily properties afterwards but it makes sense to divide the question in two and start with the easier Single Family model first. 

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**Goal:**

I'm trying to learn how to build acquisition/investment valuation models for real estate properties *in the Los Angeles Area*. I have models from the company I work at as an example but I want to understand the fundamentals of these costs so I can make them myself from scratch and/or improve the accuracy of the current company models. It would be a huge added bonus if I also got an understanding of what costs are variable based on location/market, and I would need to adjust if I did valuation in a different market, and what costs are fixed nationally almost regardless of location since at some point I will be asked to do outside LA valuations. 

*What made me ask this question is a good example of what I'm trying to accomplish*; As I was going through the single family valuation model provided to me by my company I realized the property tax for carrying costs was set at 1.19%; looking it up I realized this was the national property tax average and not the average for California. So I made the location a drop down menu with IFs() so the tax rate can change automatically in the calculations based on the market selected. *I want to see what else I can do to improve the accuracy of the mode.*

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I know generally there are 3 kinds of costs aside from costs of Cap Improvements and Debt Financing to be considered; 

1) The cost of acquiring the property (acquisition cost)

2) The cost of selling the property (disposition cost)

3) The cost of holding &amp; operating the property (holding costs)

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***Now for the difficult detailed part*** **(SINGLE FAMILY)**; listing and accurately finding values/formulas for all those types of costs to be built into the model. For the purposes of this discussion I will ignore operating costs and focus only on costs associated with  acquiring, selling, and holding the property. Here are examples of the closing and carrying costs from the single family company model; *important part is really the formulas for their calculation*:

[gg](https://i.redd.it/dcrcwafdqfa21.png)

Listed to the right of the values under 'Formula' is how those values are calculated in the model or if they are fixed hard corded value. 

***Questions:***

1) Are these costs formulas correct for the LA market for condos and houses? Would you know where would you look up these values? Are they are costs present you do not see that you would add? I want the calculations to be as accurate as possible. 

2) Do any of these costs differ between houses and condos? What about if it is a relatively cheap/small condo vs a large/expensive house, ie properties on different ends of the Single Family category? Still the same formula or fixed costs?  I can create drop down menu's and IF equations that would adjust the formulas if there are differences based on difference in the value/scale of different single family properties. But I need to know if such a variation exists and what those ranges of change are if I'm to model them! That is a part I do not know. 

3) Are all the costs whose formula is labeled 'fixed;' actually fixed costs? Do they change if it was a different state/market? Just want to make sure about that. 

4) The Brokerage Fee under disposition is a major factor in the total calculation; is brokers fee *always 5% fixed cost*? Does this vary based on the size/value of the single family property in question? If yes is there a good resource that calculates this or method/formula that can be used for doing so? Even small variable changes in % of brokers fee would be worth noting. 

Thank you for any help! Will repost this question now for the Multi Family property costs. 

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[{"id": "ee2hqgy", "text": "Brokerage fee is negotiable. For resi, it is often 6% - 8%. \n\nYou have the local MLS? They have something which is what you have here, called the buyers net sheet. \n\nIt has the purchase price, the down payment, the interest rate, the loan term, loan amount, tax reserve, insurance reserve, loan fee, insurance premium, property taxes (they estimate 1.5%) escrow base cost, association dues ect. All in an on line calculator. This assumes that seller pays the commissions. \n\nFor the seller, you have the brokerage fee, title insurance, city transfer tax, county tax stamps, escrow cost, ect. \n\nSo, you are trying to combine those two sides of the deal into one spreadsheet. \n\nUnless you are a flipper, not sure how to make money as an investment here in Los Angeles, you have so many properties that pencil out at a 3% cap rate ect, plus you have rent control that means you really need to know what you are doing or you will be hosed. \n\nAnyway, best of luck to you. \n\n", "replies": [{"id": "ei6ouio", "text": "Cap rates are a valuation metric not a profitability  metric.   Also they are not used to value under 5 unit residential.", "replies": [{"id": "ei6rsda", "text": "False, cap rates can be used for any investment, \n\nAnd a cap rate is a rate of return, which by definition is both a valuation metric and also a profitability metric, so not sure what you are going about mate. ", "replies": [{"id": "ei7cwxk", "text": "Where would you get a reliable cap rate comp for a SFR?  Why would you even want one when the sales comparison approach to value is more accurate than direct capitalization?  That makes no sense.\nAs far as a return, in what world does a less desirable NOI have a higher \"return\"?  Can you explain how that works?  I think you've been bamboozled by the scammers.  Try to answer my questions and you'll see that you can't.", "replies": [{"id": "ei7hoox", "text": "Cap rates are created by each sale. And are only applicable if there is rent in place. Single tenant properties has cap rates if someone is paying rent, you belief that it takes 5 or more units is false. \n\nAnd what scammers? This is part of my job. I can\u2019t answer your questions because you cannot seem to explain them, so sorry. \n\nA cap rate for a SFR only works if you are renting them out, in which case you take the net operating income and divide by sales price. \n\nNo income means no cap rate. That value is probably going to be lower than if you just took sales comps for other houses because most people don\u2019t buy houses for investment value, but to live. \n\nYou seem like an appraiser, there are ways to value properties, some better than others, but not everyone is a bank that needs your professional opinion. ", "replies": [{"id": "ei7qc7u", "text": "You need to educate yourself on cap rates.  V=i/r.  All you have is i if you even know how to calculate NOI which it seems like you don't since you think an unleased building is FREE.   LOL. Read up on PGI, that's where the cap rate calculation starts.\n\nSo you think a seller is going to sell to an \"investor\" at a lower price?  Geez, is your job being a scammer?  \n\nSo my question to you is exactly HOW do you use direct CAPitalization in SFR investing?   Surely that will be easy for you to answer.", "replies": [], "depth": 6}, {"id": "ei7wec0", "text": "Question 2.  in SF I can sell $50,000 NOI AT A 5% cap rate for $1,000,000.  In say Indiana that same $50,000  NOI would sell at a 10% cap rate for $500,000.   Why would a seller let this go at half price if the cap rate was a \"return\" that was double?  ", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}]