Normal Expenses
Jul. 11, 2021
Besides local demand, the value estimator shows the variables most likely to change and with significant weight can be quickly calculated from a few government-published values.
The goal of expense normalization is to extract constants for the myriad other expenses that are either sufficiently small or not expected to change significantly over time or a local area. This is where you do the work to accurately estimate expenses and feed the tools for easier comparisons.
|
(yrs) Loan Period (○/○) APR | Rmort | |
| (○/○) Income Tax Rate | Rinc | |
| (○/○/1○) Millage Rate | Rprop | |
| (○/○) Assessed/Appraised Value | Rgov | |
| ($) Monthly Rent | Vfairmkt | |
| (wks) Vacancy per Year | Rvac | |
|
($) Monthly Repair Budget | Rrepairs |
|
| ($) Monthly CapEx Budget | Rcapex | |
|
($) Monthly Insurance | Rinsur |
|
| ($) Monthly Flood Insurance | Rflood | |
| ($) Monthly HOA Fee | Rhoa | |
| / | Rloc | |
| ($) Assessed Land over / ($) Assessed Property Value | Rcap | |
| ($) Monthly Water | Rwater | |
| ($) Monthly Electric | Relectric | |
| ($) Monthly Internet | Rinternet | |
| ($) Monthly Lawncare | Rlawncare | |
| ($) Itemized Expenses | Rutil | |
| Inet |
The Next Step
This is the third article (3) of a series Should I Buy or Rent? Write down the bold constants you calculate to plug into the limiting dividend model (2) for easy deal comparisons or take the Inet value for estimated monthly income directly to the mortgage calculator (1) to estimate investment returns.