Planning for Capital Expenses (Reserve Study)

[Shane Pearlman]

As we are looking to be at 15-20 doors this year, I'm starting to examine how much we should really hold in reserves. The biggest part of that is determining our capital expenses for replacements as things age + any intentional updating we want to do in order to force equity / rents. 

I am tweaking on a spreadsheet (http://cl.ly/image/1b0r2q3j2a41) for each property and was wondering if anyone has thoughts or resources on the following:

1) I understand that in theory, you take a 30yr roof and divide by 30, But in practice, I only plan to hold a particular building 7-10 years. Do I ignore anything a couple years past my hold window?

2) How does this work in reality for a longer term hold? Are people really packing away 3.5% of an inflation adjusted roof annually? Seems a bit silly considering the opportunity cost of that capital. Do I wait until 10 years before the roof goes and then begin saving? The difference between est lifespan and actual with large items can vary by nearly a decade.

3) Is there a nice cost list for replacement value for a lot of the assets listed? I know a bunch of them will depend on the size of the property, the quality, the volume and the location. With that much variability, I'm having a tough time and was wondering if there are industry standards.

4) In your experience, are my lifespan est. accurate? Where do you tend to pick the averages? I have water heaters that go in 10 years and others that were installed in 1991 and are still chugging along fine. 

5) What inflation rate is everyone using right now? I'm guessing at 3%.

Not the sexiest topic, but as the numbers get bigger, it is starting to make a really big difference. I really appreciate the insights.