Dollar estimate for Capex and maintenance

2 Replies

Hi All,

Does anyone use a specific dollar amount to estimate capex, maintenance and repairs in their analysis of a deal? If so what do you use?

With rents varying so much more from location to location than the cost of materials and labor, I find it hard to use a percentage of rents as an appropriate approximation.

Thanks

I do a blanket saving for repairs/capex and maintenance.  I have a pretty newer rental though so I'm only budgeting 1% of the value of the home for that fund.  I'm also supplementing that with a home warranty.  As the home gets older, if I find I'm spending more, I'll up the % for the next year or on-going.

You could also get more specific.  Get the age of the major systems, determine their rated end of life and break down the cost of a new one for the remainder.

Same for any make-ready costs for tenant turn over (that aren't covered by deposit)

Justin

Best to put your feet on the ground, especially on an acquisition. Units can need as little as touch up paint and carpet clean or as major as a total gut due to mold and water damage, and many things in between. Exterior the same way, rotten fascia, rusted stairs, failing roofs, etc. Best to have a trained eye. If its aging systems in working order, a replacement reserve rather than Capex may cover those issues.

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