Expenses, CAPEX, and Maintenance, OH MY!

[Frank B.]

I'll start out by saying I'm not trying to debate the merits of the "50% guideline." For various reasons, that guideline will not work for me. I don't know what is included/excluded in that value, and every time it is used, it is immediately followed by "but you should calculate the actual expenses for the individual property." Having searched the site, I have not been able to find any information on how to actually do that.

I want to do some buy and hold properties, but need to estimate the cash requirements to know if they are a good idea.

Some expenses seem easy to estimate (insurance, prop tax, vacancy, management, etc). But the "maintenancy" stuff seems pretty nebulous... So I made up a method that makes sense to me, but I need some help and feedback for if it is realistic at all.

I was thinking the "maintenancy" expenses could be broken into 3 pieces:

A. CAPEX -- stuff breaks and has to be replaced
B. Regular Maintenance -- preventative maintenance, consumables, etc.
C. Turnover Maintenance -- "make-ready" costs for a new tenant

The idea is to estimate the capital expenditures based on their expected cost and how often the purchase happens. eg if you buy a roof every 20 years, on average your annual expense is 1/20th of the future roof cost.

So I put together a list of some stuff that I thought might need to be replaced in a SFR along with how often it would need to be replaced:

Roof: 20 yrs
Water Heater: 10 yrs
A/C: 15 yrs
Heater: 15 yrs
Blower: 20 yrs
Ductwork: 45 yrs
Siding (if applicable): 30 yrs
Oven/range: 10 yrs
Dishwasher: 5 yrs
Countertops: 20 yrs
Wood flooring: 30 yrs

So if I know how many of each of these there are in a property, and estimate the remaining life on each of them, I can get a good feel for what the annual average cash requirements will be to replace stuff.

So I guess my questions are:

1. Does this approach make sense?
2. If so, do the lifespans I listed make sense? What else should be added to the list?
3. How can I estimate "regular maintenance" for the small stuff?
4. How can I estimate "turnover maintenance"/ make-ready cost?

Thanks in advance for any feedback, and sorry for the long post!


P.S. I am trying to invest for cash flow. I know that depending on what accounting you use, CAPEX stuff might not technically be "expenses" but I'm just trying to figure out cash obligations.