Controllable Expense Underwriting on 30-50 Unit Deals

When you're underwriting smaller deals what do your controllable expenses look like?

If you're doing 30-50 units, it would seem to me on the surface you would have some variations from larger deals like perhaps a higher property management fee but lower payroll costs, because I would imagine you wouldn't need to hire a full time onsite manager and maintenance guy.

How do you generally underwrite payroll on smaller deals and what kind of hours are you expecting from employees?

On a small deal, you might consider a 1099 independent contractor who can both manage and do maintenance. You won't have the other payroll expenses.

Paging Gino !

I always try to assume around 50% of gross income for expenses. In our market, I know from experience that it costs generally 3600-4000 per unit for expenses, depending on the asset class. Higher properties cost more due to amenities, but lower properties tend to have more expenses due to age and repairs.
I would ask a mortgage broker or a banker who underwrites multifamily what they estimate as an expense figure. Scaling up is great, but there are additional costs, leasing agent, assistant, full-time maintenance. Smaller properties can employ a resident manager who can work for a percentage of revenue.
Gino