I wanted to reach out to the board here to get some input on how others (especially lenders) U/W multifamily deals. I work for a boutique capital markets brokerage and I'll copy how we u/w deals below. I'm told that these best practices match even our most conservative correspondent lenders.
These best practices apply to properties in the greater SF Bay Area and greater Los Angeles area that are 10 - 200 units. While I know that many of you do not primarily focus on this region please share your best practices anyways so I can compare.
RE Taxes - (1.15% - 1.25%) of purchase price if acquisition. If refi, look up tax bill in county website.
Insurance - (0.30 - 0.50 per sq. ft.) All else being equal, the older the property the higher the insurance.
Utilities - borrowers actual in prior year plus 3%. If not data, roughly $1,000 per unit. (gas, electric, water/sewer and trash).
Repair & Maintenance - u/w greater of prior years' actual + 3% or 750 per unit. (includes R&M, supplies, landscaping, etc.)
Management (Off-site) - (4% - 5%) of EGI.
Management (On-site) - (2%) CA state law required for buildings greater than 16 units.
General & Admin - u/w greater of prior years' actual + 3% or 150 per unit.
Capital Reserves - 250 per unit