Hard Data On Capital Expenses and Repair Line Items

Bayonne, NJ · Member since 2015 · 52 posts · 6 votes

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 that are outdated but I can’t say because I am new.

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Dale Hensley

Real Estate Investor · Fishers, IN · Member since 2014 · 35 posts · 30 votes

11y

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.

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Chad Lopes
Investor · Birmingham, AL · Member since 2014 · 37 posts · 30 votes
11y
I would be very interested in this info also, and in gross terms, not percentages so you can scale to rent levels.
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Dale Hensley
Real Estate Investor · Fishers, IN · Member since 2014 · 35 posts · 30 votes
11y
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.
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Rhett TullisBusiness Member
Property Manager · Oklahoma City, OK · Member since 2013 · 1k+ posts · 617 votes
11y
i manage quite a few in the okc area (own some as well) it is very hard to give you the data you need as there is so much variety in inventory. if you narrow it down by age of home it may be a bit easier to find. I manage homes as old as 1900 and as new as 2014 so you can imagine there is a wide range on capital expenses.
[email protected]405-283-6522
Integrity Oklahoma
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Gary Freidman
OP
Bayonne, NJ · Member since 2015 · 52 posts · 6 votes
11y
@Dale Hensley
It seems like you are managing yourself while I would assume on a pure numbers basis most properties that would be in any hard data analysis are managed by property managers and/or REITs. Even someone who owned or managed 300 - 400 properties would probably be a good sample size.
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Dean Letfus
Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
11y
In Memphis we only deal in brick homes and our maintenance over last 4 years would average over 2K a year. Probably closer to 3K. It is very unusual to get less than $1500 every turn.
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Chad Lopes
Investor · Birmingham, AL · Member since 2014 · 37 posts · 30 votes
11y
@Dean Letfus
So, that 2-3K is all in, repairs plus capex?
Chad
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Charles Worth
Investor · New York City, NY · Member since 2015 · 808 posts · 417 votes
11y
@Dean Letfus
Is what your talking about associated with a move-out? If so, wouldn't it be better to use some type of adjusted number as (hopefully) a property does not turn over ever year?
Also considering that it is fairly high on a % basis (if it is just capex and R&M) is that just due to the area or are you in A and B areas?
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Dean Letfus
Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
11y
Memphis it is pretty unusual they stay more than a year. I am only B and high C areas. This is total actual Rand M costs per annum
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Gary Freidman
OP
Bayonne, NJ · Member since 2015 · 52 posts · 6 votes
11y
@Dean Letfus
Thank you
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