Curious how you decide your number for CapEx?

[Brian H.]

Hey all!

So when you are deciding what to set aside for CapEx when doing a property analysis do you adjust it based on how new certain items in the home are? A property I am looking at has a 2 year old furnace, 8 year old roof, 4 year old water filter system... would you maybe hold less on that expense since these items are newer or just do the same amount regardless?

Thanks!!

[Account Closed]

My calculation for CapEx reserve is = to my monthly depreciation expense. I use MACRS 200% DB as the depreciation method based on IRS guidelines outlined in Publication 527 (linked).

Newer items are depreciated faster up front with depreciation slowing as they get to the end of their useful life.

Reserve dollars are placed into an interest bearing money market account.  It's a revolving fund - capital expenditures are paid from that account.