Variable Cost

A variable cost changes with activity or sales. In rental property, management fees are the clearest example, since they are charged as a percentage of rent collected. Repairs and turnover costs also move with occupancy and tenant wear, though less predictably.

The calculator treats management, maintenance and capital reserves as variable, each a percentage of effective gross income. On the default house they come to $8,208 a year: 8% for management and 5% each for maintenance and reserves on $45,600 of collected rent.

Modeling these costs as percentages keeps them in proportion when you change the rent. It also means a rent increase does not reach NOI in full. A $200 monthly raise adds $2,400 of scheduled rent but only about $1,870 of NOI after vacancy and the percentage costs.