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Articles / Accounting and Finance

Multifamily accounting and finance

The numbers behind asset value: reserves, expense ratios, gross potential rent and how to read them.

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Accounting and Finance

Replacement Reserves: What Underfunding Really Costs

Owners see idle cash. Managers see the roof, the boilers and the parking lot waiting their turn. Here is how to size replacement reserves and what happens when you skip them.

· 13 min

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About our articles

What do your multifamily accounting articles cover?
Our multifamily accounting articles cover reserves, operating expense ratios, gross potential rent and other numbers that drive value.
What is a healthy operating expense ratio?
It depends on the property, but the ratio should be tracked monthly against a budget. Our article on the 40% rule explains why.
How much should I hold in reserves?
Enough to cover planned replacements without emergency capital calls. Underfunding creates risk.
What is gross potential rent?
It is the rent a property would collect if every unit were leased at market rent with no loss.
Does Next Level do the books for clients?
Yes. We handle accounting, reconciliations and monthly reporting, and prepare financials for your tax accountant.