CapEx on Rentals - Eating Up All Cashflow?

[Andrew Herrig]

I've got a handful of singe family rental properties that I mostly completely renovated when I bought them, but I am starting to look at what I should be setting aside for capital expenditures and am pretty blown away at the costs.

If I intend to hold a property forever, I am calculating somewhere in the neighborhood of $200-250 per month for capex, which seems to be in line with others' assumptions on BP. Most of my houses rent for around $1000 per month and if I assume 10% of rent for maintenance, 8% for vacancy, 15% for taxes (taxes are relatively high in TX), 10% for management, and 5% for insurance, that is around the 50% rule. But then capex is ANOTHER 20-25% on top of that. 

So total expenses long term would be in the neighborhood of 70-75% of rents! If you have a mortgage on the property, you'd basically be at zero cashflow, and even if you bought for all cash you'd be looking at a pretty terrible cash on cash return.

What am I missing? If appreciation kept up with inflation, that would mostly make up for the capex expenditures, but I don't really want to count on appreciation to bail me out.