Budgeting for major expenses in rental purchase/rehab

[Sean Kuhn]

I always allow 20% of gross rent for vacancies and repairs when I do the numbers for a potential rental property. I'm currently looking at a potential property that needs all the usual cosmetic stuff(floors, paint, appliances) which I always calculate into my final price and return on investment. My question is the roof and furnace will need to be replaced in 2 to 5 years, let's say 3.5 years. Do I figure both of the those into the purchase price or do I let the 20% vacancy and repair budget pay for those?