This is kind of a back-to-basics discussion here but I've seen a lot of variation in how much everyone is allocating for repairs/CapEx/both. The numbers look a LOT different depending on your assumptions. What are your percentage rules of thumb for 1) New house/unit, 2) 10- to 15- year-old house/unit, and 3) older house/unit? I know you've got them because when you're analyzing tons of deals you're not stopping the whole process to get an exact age on the hot water heater :)
I usually plug in 1% of purchase price per year for CapEx for a SFH plus 4-10% of gross rents for repairs. Recently I've been tempted to assume more like 0.5% for CapEx if the home is brand new or recently fully rehabbed. What do you think? Too aggressive or too conservative?
My father has a home that I manage that when bought was 4 years old. In 20 months since the initial purchase it had a broken water heater a major leak in the front yard watering system, and found that the prior owner severely misinstalled the laminate flooring. I mean it's not the worse things that can happen but it's about $1800 in damages to a relatively new house.
While your not likely to encounter a lot of damages on a new home, it can happen and you never know if it's a cheap water heater or a major pipe burst. Best to account for it and not need it then need it and not have it. Kind of like a pm fee, even if you self manage, one day you might not want to. Just my 2 cents
Thanks @Samuel Glantz . I think anyone would be pretty silly to pretend like they don't need to account for both minor repairs and CapEx in their deal analysis...just wondering what everyone else is using for rough numbers. Thanks for weighing in.