Capital Expenditures in Florida

[Pat L.]

Thanks to the BP community for your posts on Capital Expenditures. I potentially would have let wishful thinking influence me to underestimate these expenses.

Obviously, it is best to estimate these expenses on a house-by-house basis. But, as a starting point when looking at pro-formas for Florida homes, do you have any tips? For example:

• with the weather being what it is in Florida, what would be the estimated cost and useful life be for a HVAC system? I would imagine it's shorter than average. 
• Would a roof have a shorter expected useful life?

As always, any advice would be greatly appreciated.

[Pavlos Kasselouris]

Capital expenditures include a variety of things that can happen in a house, like roots inside your sewer system, that are not considered regular maintenance. Depending what you put in your calculations that amount can flactuate. The only reason Im saying that is dont try to calculate with so much precision your cap ex dollar amount because thats going to be a lot of times off. 

For example a AC unit might have 15 year life span, but because a repair was too much I replaced a unit in 9 years but got some credit for the old unit. That was a new cost of $2350 with a 10 year warranty. The roof when I bought the property had at least 10 years of life. For that property before I bought it I did my calculations with a 10% cap ex. 

On another property that I had rehabbed everything, I calculated 5%. Of course if there is deferred maintenance I will consider it in my initial offer, when analysing comps.

To answer the roof question a new roof today depending what you install can have up to 35years warranty. A roof that was installed 2004 I would calculate that it has around 8-10 years of life.