How do you categorize expenses for your Multifamily?

[Quy Huynh]

Hello,

When reviewing expenses to my multifamily properties, there seems to be 2 types - maintenance/repair items and capital expenses. How do you guys track / categorize your expenses so when it comes time to sell, you can show the prospective buyer it costs X to keep the property up to par and y to improve it. Or is everything in 1 big expense number? Does it really matter where the money being spent is going? 

Thank you! 

[Jonathan Towell]

Capex is used to track capitalized expenses. These are items that are usually over $2k and follow a depreciation schedule. Capex is "below the line" and not used to calculate net operating income (NOI).

So, patching a floor is a maintenance expense and above the line (included in the valuation). Upgrading the floor is capex and below the line (not included in valuation).

I hope that helps!