Reserves and the APOD

[Jeremy K.]

Hello to all..How do you or should you incorporate reserve funds into the APOD when figuring out what a property is worth? Since technically it is not an expense (at least I believe not) but a capital investment that gets capitalized on the balance sheet. Would the expected cost be figured into the normal property anlaysis (50%-2% rule, cap rate, etc..)?

I realize that the cost of these items (new stove, fridge, carpet, etc..) will lower my bank account. As of now, my excel template that I have does not take any reserves expenditures into account. I do have an amount set-up that I will start with and I do have it factored into my cash on cash return. Just not positive on what do do for the cash actually payed out for items.

Any help will be appreciated!

Thanks

Jeremy