@Kenneth Hynes:On MF, capital expenditures are below the line.

With many properties that are marketed as turnkey and even companies that market themselves as turnkey, you will still deal with capital expenditures.  

Things can go wrong if the market tanks, vacancies and capital expenditures come up that they don't have the cashflow(from income or other sources) to maintain, etc.On my investments, it's a requirement that it cashflows $150/door with whatever financing I have in place.

Also, in general, is there a specific rule for what constitutes a "repair" and what is a "capital expenditure"?

This heavily depends on what type of property it is, but I have a client group of hotels where whenever they place a hotel in service, cost seg lets them pull several million into de minimis safe harbor expenditures.

Here is my list of comprehensive items to account for when evaluating an investment: 1) Mortgage2) Mortgage insurance (PMI or MIP) or FHA Risk base3) Property Taxes4) City Taxes5) HOA (Home Owner’s Association) Dues and Fees and Assessments6) Insurance Property Hazard InsuranceFlood InsuranceEarthquake InsuranceUmbrella Insurance7) Vacancy Rate (usually 8% - the equivalent to one month a year, or 5-6% if multifamily and/or if experienced, if not use 8%)8) Utilities (you’ll have some or all of these if your tenant is not covering them and/or during vacancy) Water § Sewer § GarbageElectricityNatural GasPropane9) General Maintenance (usually 5%) Upkeep § LandscapingSnow removalRepairsNew Appliances10) Capital Expenditures (usually 5%, higher is the property is old and obsolete, less if fully rehabbed and all mechanicals and roof are new)11) Property Management (8%, even if you self manage, your time still has value and there might be a time when you'll want to be completely hands off or you'll not be able to do it, vacation, retirement, etc.)

1) New company has not done anything yet and has no assets no bank account, no transactions. 2) Has assets but no transactions other than the purchase of a property. 3) Has assets, a property was purchased, the only expenditures were capital improvements, no expenses.

Ie; $1K per month rent = $500 per month towards taxes, insurance, management, capital expenditure, electricity, heat, sewer, water, lawn care, etc. 

Lastly, your PM should be providing you with a yearly budget which properly accounts for future repair contingencies and capital expenditures, per his/her recommendation.

I would add verbiage to your OA that cited if a partner could not contribute a required amount of equity for a future project (capital expenditure, improvement, etc.) then he gives up a % of equity in the company as you add equity to the company.