Capital Expenditures versus Expenses / P&L

[Chase Gochnauer]

Hey all,
I have a good sized portfolio, approx 300 units. I have W2 staff managing and maintaining the units.

We have recently run into an issue where our P&L looks a bit rougher than it should. One main reason for this, is due to the work we are doing to improve units. I have never made a strong effort to break out payroll costs to capitalize them for the time spent on capital projects versus R&M.  There are other items also that I have on my P&L that I'm thinking I should capitalize to strengthen my P&L. This is slightly different than taxes per say, as my CPA will do different things with the numbers than we do with the P&L.

Couple of items I have on P&L now that I think I should capitalize?
- Hot water heaters
- Flooring replacements <$2500
- Window replacements(done in house)
- Appliances

Are there others out there that have a similar W2 labor setup that calculate hours to capitalize part of payroll? The issue is that my P&L doesn't look as strong as it should for DSCR issues. However, we are making mostly the right decisions because we are improving the properties with the extra money that we are spending.

Anyone out there in a similar situation?