CAPX Rule of Thumb?

[Leif Cedar]

What's a good rule of thumb for CAPX?

[Nick B.]

Originally posted by @Bryan Hartlen:

Originally posted by @Nick B.:

Initial - $5000/door minimum and then adjust based on physical inspection.

Ongoing - $300/door/year reserved for CapX

 Do you go into value-add deals with the $5k/door in reserve or so you build up to it over time using cashflow?

$5K/door is allocated upfront for rehab. It is meant to be spent in the first year or so. Doing rehab out of cashflow is a recipe for disaster. 

BTW, $5K is just a ballpark estimate of the immediate capex for preliminary underwriting. The final number is usually higher.