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Updated over 4 years ago on . Most recent reply

What do you set aside for capex and repairs?
Do you have a rule of thumb when you’re searching for buy and hold deals? Are you setting aside 10% of prospective rental income for capex and 10% for repairs regardless, or fine tuning it based on factors like the age of the house/equipment?
I tend to err on the side of caution so I’d like to overshoot my potential budget expenses, but I don’t know if 10% for each is prudent.
Most Popular Reply

If you really want to fine tune it, the math is not that difficult. Just take the cost of the capex (which will differ for each property based on size and number of components), divide it by its expected service life, and then add up the various components.
For example:
Roof: $15,000 / 30 years = $500 per year
HVAC: $5000 / 15 years = $333 per year
Water Heater: $750 / 15 years - $50 per year
For these three items, your reserve for capex would be $883 per year, or $74 per month.
- Jeff Copeland