Capital Expenses

1 Reply

Does not anyone have or know where one can get data on capital expenses over time such as how long a roof will last, a furnace etc.

Also how the capital expenses and R&M budget changes by age of house (in other words a 1920s house will have one level of expenses, a 1950s another, etc.)

I think just using 10% or 12% for all is not the best way to go about it on B class type properties or C and D. 

@Gary Freidman  ,

There is no database of lifespans of CapEx from various eras of construction that I know of. A 1910-1940 built home may need new water and sewer lines. Electrical would need replaced if it is the "knob-tub". These are in addition to roof, siding, flooring, furnace, A/C, maintenance... For a newer home (late 90s - early 2000s) the water/sewer lines and electrical system are typically not a concern but always verify.

If you plan on owning a SFR for 35-40 years, you are guaranteed to need to replace a furnace, water heater, all appliances, and the roof at a minimum. I calculate everything conservative. I look at the estimated yearly cash-flow with all the major items replacement costs averaged over how long I think I will keep the rental. If your reserves are tight then count on using credit. Or use a conservative CapEx factor.

In C or D location, know going in that your interior maintenance will be much higher then A or B rentals.  Personally I don't invest in C or D for that reason.  Quality of tenants have a direct effect on your return in both time and money.

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