Even with 2 of 3 remodeled, capital expenditures will be needed down the road.

@Reece Teramoto When it comes to building a team, the million dollar question is in what order do you build the team.To answer your question about the contractor, we typically make an offer based upon estimated rehab and capital expenditures on a property based upon an initial walkthrough by our agent or property manager.

Call up vendors and request to buy credit for purchases or marketing expenses for next year to increase your expenditure for this year.

For me, it's 5% of the rent plus another 2-5% for big things (capital expenditures).

@Kevin Connelly Based upon the cap rate it sounds like the property either needs large capital expenditures or has serious tenant issues.

Some agreements state something to the following: Manager agrees to secure the prior approval of the Owner on all expenditures estimated to be in excess of $____________ for any one item, except monthly or recurring operating charges and/or emergency repairs in excess of the maximum, if in the opinion of the Manager such repairs are necessary to protect the Property from damage or to maintain services to the tenants ........If they deemed it an emergency and it was written in your agreement then maybe but I honestly think that at a $3,900 value they definitely should have gotten your approval.But check the contract and get all supports for the repair cost (invoices and pictures).

If the locals are unable to buy, you will not likely secure the kinds of rents you need to keep your cash flow from being swallowed up by capital expenditures and maintenance. 

Below the line is where the debt service and capital expenditures are removed to come up with your Net Income.That being said, that means that a unscrupulous broker/seller could push operating expenses below the line to boost the NOI numbers so you need to be aware and look through the financials closely.

Maybe they are preparing for a capital expenditures or a big upcoming cost.

At your current cap ex budget, in ten years you'll have $11,520 allotted for capital expenditure.