What is a good CapEx percentage?

[John Barr]

What is a good percentage to pull from the cash flow in a rental property?

Say you have a house that is 1,700 sqft rental property that was built in 1975. The property just underwent a 50K renovation (foundation, roof, bathrooms, kitchen, flooring, paint, pretty much everything but the AC). The property is rented out for $1,500 a month.

I was figuring a 10% hold back for capital expenses before payment on everything else. So for this house, I would be holding back $150 a month.

What are your thoughts?

[Mike B.]

John Barr I think it varies. Based on your example which is same for me (I buy, renovate everything and rent) if you have mostly newer stuff that shouldn't break I use a much lower capEX. If I had a property that I know will need a new roof etc in the next 1-3 years I save more. It's definitely situational

I think your goal of $150 may be a little too high. Maybe only save $100/month? You know your place better.

I just completed a renovation and replaced everything (roof, appliances, HVAC) except the water heater so my cap ex is about $100/month as I know it'll need replacement in 1-3 years. Hope this helps.