Simple Cap Ex question

[Dave Friedman]

Hi, all. First, apologies if this is the wrong place to put this question--my buying a place hinges on it, so I hope this is the right place to post.

Anyway, total noob question. A lot of you are probably familiar with Brandon's article on estimating cap ex, where he offers ~$180/mo as a ballpark figure for SFR residences.

What I'm wondering is, how "universal" is this rule of thumb? I'm looking at buying a $60K SFR, with a rent of $790/mo.

To achieve a bare 10.2% CoC return, I need to keep cap ex and maintenance down to a monthly total of $125.

What am I missing? How does anyone buying SFRs at this price make it work if $180 is more-or-less where it's at?

Thanks so much for any thoughts--this is really preying on me.

[Mike Dymski]

There is nothing universal about a rule of thumb.  Cap ex will vary by property, market, and investor.  Brandon recommended charting the cap ex for each specific property.  It's more art than science but more science than not doing it.  You should use the estimated remaining life of the property component rather than the life of a new component.

I buy value add investments and force appreciation...so that strategy does not require as sharp of a pencil on calculations and leaves more room for error.