How do I find out a maintenance cost on a property I’m potentially buying?
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[{"id": "hy1u4zq", "text": "Generally when I\u2019m looking at a property, I factor a 10% maintenance fee as an expense in my cash flow analysis.", "replies": [{"id": "hy1uydq", "text": "10% of purchase price? I\u2019m talking about the building\u2019s maintenance/operating cost on monthly/ annually basis.", "replies": [{"id": "hy1w7sa", "text": "10% of gross rent for maintenance. It\u2019s more of a loose guideline, you\u2019ll have to tailor it to the property/area but 10% is what I normally go with. Operating costs are separate from maintenance. You should be able to get more information on operating costs from the listing agent.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hy205nl", "text": "What kind of home are you buying ? Single family home, multi plex, condo/townhome, commercial property, short term rental property. U need specific info before you can get your question answered", "replies": [{"id": "hy2430x", "text": "30,000 sqft retail commercial building.", "replies": [{"id": "hy2bc8t", "text": "Any decent landlord with This large of a property SHOULD have opex reports available to potential buyers during the dd period. Again a decent landlord should expect a buyer to ask for this and historical maintenance costs and can do so fairly easily. \n\nSource: former commercial PM that assisted with dd and ran these reports myself.", "replies": [{"id": "hy3my61", "text": "Thanks! I feel more comfortable ask for this now. Is there anything else you think is important to ask for on a building like this?", "replies": [{"id": "hy64iq6", "text": "Yes! \n\nTenant leases and or estoppels\nI would assume any relevant contracts\nSales reports of tenants etc. \n\nI googled \u201cdue diligence checklist for buying commercial property\u201d and this link popped up. It\u2019s in line with the items I\u2019ve assisted with. Great start! I hope it works out and is the perfect deal for you!\n\nhttps://www.thompsoncoburn.com/insights/publications/item/2016-11-13/due-diligence-checklist-for-commercial-real-estate-acquisitions", "replies": [{"id": "hya1yix", "text": "Thank you so much!", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hy3cn6b", "text": "You are looking for the operating statement which may have a different name but essentially shows rental income, operating expenses with categories to generate a total of net operating income. The key is to make sure this is actual (not projected) so it will of course be in arrears. You can use this to project income, size debt, etc. \n\nDuring due diligence your job is to confirm this statement and see if its a reasonable basis for going forward income and expenses. Lease copies, tenant interviews, a cashflow statement (general ledger sometimes tested against actual invoices), and public tax records. \n\n\\*\\*\\*some of this might be overkill depending on the value of property, market, and sophistication of current owner\\*\\*\\*", "replies": [{"id": "hy3ncon", "text": "Thanks, this is a owner occupied 30,000 sqft space for a big chain, my goal was to find out how much expense is to run the building on monthly basis.", "replies": [{"id": "hy3ujhk", "text": "You should try and get an accurate P&amp;L statement from the current owners. That would show the repairs and maintenance and should give you a good idea of what they had to repair as of recent and what they paid.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hy489a6", "text": "I would expect any owner to reveal this information before Due Diligence period.  Who would sign a purchase agreement without knowing the Actual NOI, OE, etc?  Broker may require a CA, but just ask the broker what the Operating Expense number is.   Or better yet the average OE number over last 3 years.  \n\nYou say in original post you want maintenance costs and below you're just trying to figure out monthly costs to run the property.   Either way, for now, until DD period,  you really just need OE figure as it includes everything from taxes, insurance, utilities, maintenance, lawn/snow, etc.", "replies": [], "depth": 1}, {"id": "hyhqnd4", "text": "The P and L\u2019s should have all expenses on it.", "replies": [], "depth": 1}]