Hard Data On Capital Expenses and Repair Line Items

[Gary Freidman]

Does anyone have any hard data on what annual capital expenses should be in the Midwest such as Indianapolis, Kansas City, Ohio, Alabama, Oklahoma, Nashville, Chicago, Memphis and the like? Before anyone points me to the many posts about the topic I have read them, I just do not see a lot of hard data backing it up nor a lot of people with a lot of properties under management chiming in. 

I also did not see anything about how much the build year affects these costs. I assume a 1920s house will cost a lot more than a 1990s house but I have not seen any data on how to quantify this difference. I assume it would be in certain things not mentioned in the above such as plumbing, electrical systems, etc. that are outdated but I can’t say because I am new.

[Dale Hensley]

I think the biggest reason that you did not see a bunch of hard capital expense data is because it is completely on a case by case basis. I primarily flip homes but also have some rentals. Rule number one is price anything that needs updated into the purchase so that you don't have a lot of capital expenses. No matter what the year, if someone was living in it, it was most likely updated on the major systems through previous ownership. Insurance companies have all but eliminated you finding a house with knob and tube, aluminum wire or fuse boxes so they should already be done. If you have to replace the box, it's a one time cost of about $1k. Plumbing systems don't need to be updated other than water heaters which are easily and cheaply replaced. Sewer pipes can becomes  problem if trees get to them and that is a big expense but there are some things to look for before a purchase that could give you some clues as to if that may be an issue later. 

Furnaces and a/c units also wear out periodically and have been updated over the years. That is a planned expense and won't hit you hard if planned for. 

Roofing is cheap. I got a quote recently on a roof for $8k. I had a different crew do it. It cost me $1900. All I paid them was $62.50 a square and te tore off, installed and hauled away the trash. The rest was materials at about $75 a square. That roof costs you about $80 a year (about $6.70 per month) 

If you buy good houses, capital expenses are not a worry and are just part of the business and they are always planned for.