Budget for CapEx vs Repair on long term rental property

[Jason Howell]

I have bought four properties in the past year and prior to purchase, ran all numbers based on budgeting 10% for repairs and 10% for CapEx expenditures. These were acquired via turnkey, so in nearly all cases, all big ticket items are relatively new (within the past few years), though there is one instance where the water heater is a bit older and will need to be replaced in five years or so. So I realize that CapEx budget should reflect the reality of replacing those big ticket items by the approximate time their useful life is up which in most cases is far down the road.

But I struggle with this idea that I want those funds full NOW and not slowly accumulated over time. If I have extra money, I've been throwing it into those funds to build them up, sacrificing the HELOC principle paydown that those extra funds could be directed to.

Is 10% for BOTH repair and CapEx overkill? And how do you determine whether your extra money goes to principle pay down or building up those funds? I'm considering dropping CapEx to 5% to increase principle paydown but part of me is hesitant to do that to protect myself in the long run.

On an unrelated note, I will say that the repair funds that have accumulated have already been used on a few properties and it was really nice to know I had those items budgeted for from day one. I didn't feel it when it happened, just utilized the repair fund for each property to make up for the shortfall in rental income and moved on. YNAB is amazing for managing all of this easily IMO.