Deal Analysis: Maintenance and CapEx

[Brian Bistolfo]

Hey Everybody,

This is kind of a back-to-basics discussion here but I've seen a lot of variation in how much everyone is allocating for repairs/CapEx/both. The numbers look a LOT different depending on your assumptions. What are your percentage rules of thumb for 1) New house/unit, 2) 10- to 15- year-old house/unit, and 3) older house/unit? I know you've got them because when you're analyzing tons of deals you're not stopping the whole process to get an exact age on the hot water heater :)

I usually plug in 1% of purchase price per year for CapEx for a SFH plus 4-10% of gross rents for repairs. Recently I've been tempted to assume more like 0.5% for CapEx if the home is brand new or recently fully rehabbed. What do you think? Too aggressive or too conservative?