Expense Section
Transcript
Welcome to this video. I will cover the expense section in the ARGUS Multi-Family Model. Let’s get into it.
Per Unit Expenses
There are three sub-sections in the expense section. Per-unit based expense section, percentage-based expense section and reserve expense section. I am going to type in the first expense – insurance. Click the INPUT EXPENSE button. An expense window pops up. This is basically the same window as we see in the existing Unit Mix section. I have the three buttons on the top and the operation box in the top left corner. I have talked about them in detail in the prior video of unit mix. I will say the insurance expense is 588 dollars per unit per month. Copy down and across. It grows by 3% each year. Times 1.03. Click the first calc button. I can see that I am inputting expenses for 20 years regardless of my holding period. Click Save.
There are 3 columns in front of the INPUT EXPENSE button, the first one is the expense per unit per month. and the second one is the annual expenses per unit. Then the third one is the annual expense per square feet, it is calculated by multiplying the expense per unit per year by the number of units and then divided by the net rentable square feet.
Then the next expense is Security. Click the Input Expense button. 3,984 dollars per unit per year. It grows by 3% each year. Click the calc button and Save. For Repair and Maintenance, 48 dollars per unit per month. It grows by 3% each year. Click the calc button and Save. The next expense is Utilities. Click the Input Expense button again. 12 dollars per unit per month. It grows by 3% each year. Click the calc button and Save. For building management fees, click the Input Expense button again. 552 dollars per unit per month. It grows by 3% each year. Click the calc button and Click Save.
The next expense is Elevator. 24 dollars per unit per month, grows by 3% each year. Click the calc button and Save. For G&A services. Click the Input Expense button again. 18 dollars per unit per month. It grows by 3% each year. Click the calc button and Save. The next expense is Marketing. Click the Input Expense button again. 24 dollars per unit per month. It grows by 3% each year. Click the calc button and Save. The next expense is Taxes. Click the Input Expense button again. 2,640 dollars per unit per month. It grows by 3% each year. Click the calc button and Save.
The next expense is Landscaping. Click the Input Expense button again. 36 dollars per unit per month. Grows by 3%. Click the calc button and Save. Next expense is Turnover. Click the Input Expense button. 12 dollars per unit per month. Increased by 3% each year. Click the calc button and Save. The next expense is Capital Replacement. Click the Input Expense button again. 300 dollars per unit per month. It grows by 3% each year. Click the calc button and Save.
Now I have finished inputting all the per-unit based expenses. There are 30 rows in the per-unit based expense section, if I have more line items, I can go ahead to input them.
Percentage-based Expenses
Let’s move onto the percentage-based expenses. There are 2 built-in expenses in this section: the management fee and the asset management fee. The management fee is based on the net rentable income and the asset management fee is based on the total equity amount raised for this deal. I will input 3% for the management fee. 1% for the asset management fee. The reserve deposit will be covered later when we talk about the total reserve cell.
Let’s go to the Annual CF summary tab. I can see the expenses have been modeled out.
Alright, I complete the expense section in the ARGUS Multi-Family Model. Thanks for watching this video. I will see you in the next one.