CapEx Thoughts for Small Multifamily

[Daniel J.]

I'm currently looking at a duplex plus a detached garage apt right now and curious if any of y'all have thoughts on what I should allocate on CapEx. I currently have my numbers as $200 per door, per month, so $600 a month. Does that sound about right? As far as I know each unit has separate major appliances including water heater, plus then a roof for the duplex and one for the garage. I am in the Houston, Texas area.

Thanks!

[Ben Leybovich]

First of all, I'm happy you are thinking about CapEx. 2 years ago, no one on BP talked about it, and vast majority had never heard of it. I guess I did my job well :)

Now - @brent 

@Brent Coombs apparently guesses at CapEx. I wouldn't recommend that lol His first mistake is to assume that CapEx has anything to do with gross. Think about it - if you have a window which needs replaced, and you know that all in it'll cost $280, is this replacement cost in some way a function of the income level? This is to say - whether your rent is $2,200/month or $600/month, the $280 cost will basically remain the same.

However, represented as a percentage, $280 is 4% of $600/month rental on an annualized basis, but it is only 1% of the $2,200/month rental annualized. The same window; the same cost - completely different %.

So - we must as Brent how exactly he figures CapEx reserves with any accuracy using %?

People - **** costs what it costs, and the denomination is $$ not % :)

Good luck!