How do you calculate capex and repairs?

[Spencer Cornelia]

I've begun running numbers on properties and would like someone who has experience to lend a helping hand.  For properties that are basically turnkey, already renovated, and appear to need very little work, I've been allocating 10% of monthly rent to cap ex and 2.5% of rent for simple repairs.

For a property that my partner and I will look to renovate ourselves and will have everything new (basically a gut job), we are allocating 10% of monthly rent TOTAL for cap ex and simple maintenance/repairs.

I know every property is different, but I am curious how you savvy investors on BP calculate cap ex and maintenance/repairs?

[James Wise]

Originally posted by @Spencer Cornelia:

I've begun running numbers on properties and would like someone who has experience to lend a helping hand.  For properties that are basically turnkey, already renovated, and appear to need very little work, I've been allocating 10% of monthly rent to cap ex and 2.5% of rent for simple repairs.

For a property that my partner and I will look to renovate ourselves and will have everything new (basically a gut job), we are allocating 10% of monthly rent TOTAL for cap ex and simple maintenance/repairs.

I know every property is different, but I am curious how you savvy investors on BP calculate cap ex and maintenance/repairs?

 Instead of using a % of gross rents to calculate capital expenses I think investors would be better suited to just itemize it.

For example.

• A typical roof (Cleveland area, my market. Yours may be different) will last 30 years. The cost of a roof is going to be around $5,000
• A furnace is going to last around 40 years. The cost of a new furnace install is going to be around $3,000
• A hot water tank is going to last around 15 years. The cost of a new hot water tank install is going to be around $1,000

How old the above 3 items are on the prospective property is going to determine how much life they have left and how much you should account for in cap ex savings.