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Updated almost 3 years ago on . Most recent reply

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Nate Boda
  • Real Estate Investor
  • Harleysville, PA
4
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Figuring out how much to budget for capex

Nate Boda
  • Real Estate Investor
  • Harleysville, PA
Posted

hey guys so I'm thinking about putting in an offer on a duplex in my area but am a little stumped on how much to figure in for capital expenditures. I'm using a 10% of rent number for vacancies and a 5% of rent for maintenance, however when it comes to capex I can't find any info on what that percentage should be. I know that it must depend on how old your house is (age of the roof, heater, etc) but is there a general percentage or a range that anyone uses? 

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Ned Carey
  • Investor
  • Baltimore, MD
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Ned Carey
  • Investor
  • Baltimore, MD
ModeratorReplied

the proper way to do it is create a reserve spreadsheet

Water heater $600 installed Lasts 6 years = $100/yr

Roof $4500 lasts 20 years = $225/yr

refrigerator  $400 lasts 8 years = $50/yr

Do this for appliances, windows, flooring, HVAC etc etc. you get the idea. If you are buying a used home then you need to figure the useable life left in the components.

  • Ned Carey
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