63 percent expense ratio on a 16-unit in San Antonio and the broker called it an anomaly

A single bad T12 is a symptom, and the question is whether it's acute or chronic.

Your math is clean and your instinct about what the number might be saying is the right question to sit with.

The broker is not wrong that those three items are categorically one-time. A roof replaced is replaced. Eviction costs end when the tenant leaves. Lost rent from a trashed unit is a discrete event. So normalizing them out to get to a pro forma expense ratio is a standard move, and your $44,900 adjustment lands you at roughly 43 percent, which is defensible on paper.

The thing your math cannot answer is whether those events were random bad luck or symptoms. A roof that needed $31,000 on a 16-unit is not unusual as a one-time cost, but one bid on file means you have no way to know if that number was market rate or a favor to a cousin. Two evictions in one year on a 16-unit is elevated. The industry rule of thumb for a stabilized property this size is somewhere around one eviction per year at the high end of normal. Two plus a four-month vacancy suggests either tenant screening was loose or the rent was priced in a way that attracted the wrong pool, or both.

What I would want before I normalized anything: the rent roll for the last three years, not just the T12, plus the maintenance log. If deferred maintenance shows up repeatedly across different systems, that 63 figure is the beginning of a story, not the end of one. Also ask who managed it and whether that manager is leaving with the sale.

A commercial property at this tier gets valued on its net operating income, meaning a normalized expense ratio directly changes what the property is worth to you. That number deserves scrutiny, not just acceptance.

What does the rent roll show for turnover over the past two or three years?

Your math gets you to 43 percent normalized, and that normalization is defensible on paper. The assumption doing the most work is that the roof, the evictions, and the four-month vacancy are independent events that happened to cluster in one calendar year rather than symptoms of the same underlying problem: deferred maintenance and poor tenant screening over a longer period.

Here is the distinction that matters. A roof replacement on a 16-unit is a capital expenditure, so whether it shows in the T12 or not, you would have had to fund it eventually. Normalizing it out of the expense ratio is standard. The evictions and the trashed unit are different. Eviction frequency is a management quality signal, and two in one year on a 16-unit is not random noise. It tells you something about who was being placed, how lease enforcement was running, and whether the previous operator was screening for cash flow or just occupancy. If screening was soft, you inherit a rent roll with weaker tenants and potentially more of the same coming.

The four-month vacancy after the trashed unit also deserves more scrutiny than the $9,600 lost rent line suggests. What did the turn cost beyond what you already counted? And what is the current condition of the other units you have not seen yet?

The risk you did not name is the cost to bring the property to a standard where your management actually works, before stabilization math applies. If deferred maintenance is systemic rather than isolated, your true capex picture in years one and two is not one roof. It is the roof plus whatever the previous operator was deferring across fifteen other units while he was managing through two evictions and a rehab.

Pull the rent roll with move-in dates and get unit-level condition reports before you finalize your underwriting. What does your current inspection reveal about the non-problematic units?

The broker framing it as "a rough year" is doing a lot of heavy lifting. A roof at $31k with one bid on file is the part I'd push on hard before I normalized anything, because one bid usually means the owner stopped shopping when they found a number they could live with, and in San Antonio that market runs wide. Get two more bids retroactively, not to renegotiate, just to know whether $31k was fair or whether deferred maintenance turned a $14k repair into a $31k emergency.

The four-month vacancy after a bad tenant is the data point I'd actually weight more than the evictions. What's the average days-to-lease on their other units when they've turned over in the last three years? If they can't answer that, or the answer is also bad, then the management problem is structural and your 43 percent normalized number is optimistic.

The one-bid roof concerns me more than the vacancy and eviction noise combined, because a single bid on a $31,000 job on a building that age often means the owner accepted the first number rather than shopping it, and that pattern shows up in every deferred decision on the property, not just the roof.

What does the T12 show for maintenance and repairs in the years before this one?

Three bad things in one year is not bad luck, it's a management failure that finally got expensive enough to show up in the numbers. I'd want to know when that roof was last inspected, because a $31,000 repair that only has one bid on file either happened in a panic or nobody was watching the building closely enough to catch it early. Deferred maintenance compounds silently for years and then lands in a single T12 right before a sale, which is a pattern I've seen described at Cleveland meetups enough times that I take it seriously even though I haven't closed anything myself yet.

What I keep turning over is that $9,600 vacant unit. Four months at their market rate means roughly $2,400 a month for a trashed unit, which sounds like the low end for San Antonio right now, so maybe that tracks. But a four-month turnaround on a single unit after a bad tenant is also a management story, not just a tenant story. A shop on top of their rehab process gets that unit back in six weeks. What was the operator doing for the other ten weeks?