Why aren't people saving a lot for Capex?

[Natalie M.]

I hear people say they only save 5-10 % for Capex, and I'm not understanding how that is enough. Even if you just replaced high ticket items like roof, HVAC, water heater, etc., don't you still need to set money aside for the full lifespan of those items? Example for 1100 sq property in mid-expensive area:

Expense	Total Replacement Cost	Lifespan (years)	Cost per Year	Cost per Month
Roof	$5,000	25	$200	$16.67
Water Heater	$750	10	$75	$6.25
All Appliances	$600	10	$60	$5.00
Driveway/Parking Lot	$2,000	50	$40	$3.33
HVAC	$4,000	20	$200	$16.67
Flooring	$2,000	10	$200	$16.67
Plumbing	$2,500	30	$83	$6.94
Windows	$2,000	50	$40	$3.33
Paint	$800	5	$160	$13.33
Cabinets/Counters	$2,000	20	$100	$8.33
Structure (foundation, framing)	$10,000	50	$200	$16.67
Components (garage door, etc.)	$2,000	10	$200	$16.67
Landscaping	$300	10	$30	$2.50
Septic	$0	25	$0	$0.00
Well	$0	25	$0	$0.00
TOTAL	$33,950	N/A	$1,588	$132.36

So that's $132 per month, best case, which if Rent is $1000, that's at least 13% of rent, assuming new EVERYTHING in the house.  So usually would require more than 13%.... but I never hear anyone saving this much.

Do most people end up eating into their cash flow to pay for future capex repairs?  This is what I don't want - but I also don't want to be grossly overestimating either.

What do you guys think about my numbers or my assumptions - am I way off??

[Mike Dymski]

Cap ex and repair estimates are a contentious topic on BP.  Your figures look pretty good (if everything is new).  Many investors use the remaining life rather than the full lifespan, which will drive up the estimate even more.

If an investor is worried about cap ex, something else is wrong with the strategy (i.e. no predictable appreciation, cash flow is tight, no value add potential, etc.).