Cash flow killer - capex

[Ben M.]

I keep hearing that rental property owners lose their cash flow from big ticket items or capex. Has anyone been able to successfully factor in capex into their expenses and actually owned properties long enough to determine that they are actually cash flowing?

[John Warren]

@Ben M. CapEx can be a cash flow killer, but don't let yourself get scared away from investing due to CapEx! I think the 5% that most people budget here on BP works well in most markets. If you are in a lower rent environment you may need to budget extra though. Most of my rentals here in Berwyn and Cicero average rents of $900-1200 per month, so that effectively puts me at a budget of $600 per year. So far I have outperformed that, but I also do a lot of the CapEx up front as part of my business plan as these are value add deals.