I am currently underwriting a commercial property. Does anyone know where to get more specific numbers for things like expense growth , Capex reserve growth, and other general assumptions. By specific I mean more catered to a specific market.
I am short a few words, but I feel like what I wrote above gets tot the point. Thanks in advance for the help
[{"id": "ig79vpd", "text": "Realpage market analytics.\n\nTypically, expenses grow at 2-3%.\n\nRent growth is whatever you think market will be.\n\nCapEx is typically 300-400 per unit per year depending on the vintage of the asset.", "replies": [{"id": "ig7q02v", "text": "I agree on rent growth. I will add that if OP is looking for something to sanity check their rents, they can use forecasts from costar and reis. Banks love to see that your estimates are supported by some sort of data", "replies": [], "depth": 2}, {"id": "ig7wbcf", "text": "Our market is like 150 for core to like 400 for VA", "replies": [], "depth": 2}], "depth": 1}, {"id": "ig7ecva", "text": "Capex reserves depend more on the loan program than market. Most banks waive reserves. Agency and CMBS are $250/unit in most cases.", "replies": [{"id": "igc1hvt", "text": "Just because reserves are waived doesn\u2019t mean they aren\u2019t including the expense in the calculation of NOI for purposes of valuing the property and determining DSCR, debt yield, etc.  FYI, lender opinion here.", "replies": [{"id": "igc2kuo", "text": "Yep, just realized I misread OP\u2019s question.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ig89gm5", "text": "Is this Multifamily or Commercial?", "replies": [{"id": "igbw0ia", "text": "Commercial", "replies": [{"id": "igbxydi", "text": "Cool..It seemed the other comments might've been oriented towards MF.. We tend to use expense data assumptions broadly from the broker OM..Then Yardi Matrix or CoStar and finally when taking a run at a deal we vet the proforma budget with our local PM. \n\nCapEx is harder. TI/LC assumption numbers come from initial leasing figures in the OM. If they make sense given our target tenant. Again if we are taking a run at a deal we will interview leasing teams to discuss what might work in the market and how to approach leasing for the building...potential costs, concessions and rent levels to attract a tenant. Chopping large floorplates into smaller suites as well as spec suites seem to be big sellers now. TI Costs are much more than we underwrote preCOVID and tenants expect much higher levels of improvement contribution from landlords. Talking office here..industrial and retail have differences obviously.\n\nCapex we estimate based on broker disclosure for large ticket items like HVAC, Parking, Roofs other mechanicals..then get granular on the site tour by bringing our GC. Hope that helps.", "replies": [{"id": "igc1z3z", "text": "TI/LC will depend on property type and market. i.e. an industrial warehouse TI going to be way cheaper than a lab space vs an office. TI specifically will depend on term (length l) of lease, if there are any termination options, initial lease rate, etc. you should really be using Argus for commercial properties.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ig9w66n", "text": "Costar", "replies": [], "depth": 1}, {"id": "igaozcp", "text": "If you are underwriting a property and have little experience, this is quite concerning. Not knocking you but don't mess up someone's investment.... \n\nWhat does your organization use? Might be a good place to start.", "replies": [], "depth": 1}, {"id": "igbtwyh", "text": "REIS and CoStar are industry standard. CREFC is  a great resource too, all are very expensive though.\n\nSounds like you\u2019re a one man show. In your position I\u2019d try to buddy up with mortgage and RE brokers, they may be willing to share info if you play it right.", "replies": [{"id": "igbvzyi", "text": "Thanks for the advice.", "replies": [{"id": "igbyk8o", "text": "Glad to help if you have more specific questions, I\u2019ve done a lot of underwriting", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}]