How much capital should be retained?

5 Replies

For a passive portfolio what amount of capital expense do you set aside?  Do you do a set amount per unit or do you just do a general fund?  If you do a bulk fund what is the set amount you use? 

It all depends on the condition of the properties in your portfolio, kind of properties, if you are expecting bigger repairs in the near future or not. Also, your personal finance and liquidity plays a key role as well.

@Justin Marshall

I would have $2K-$3K per building but it depends on the size/style of property. Most of my residential properties are in SFR worth between $75K to $200K.

But as you get more properties that's not necessary. You really just need access to capital (i.e. HELOCs, credit lines, etc)

I have 10 class B- C homes, values between 60k and 130k. I set aside 1k per month in my all purpose Capex/Maint/Vacancy account. When the total account value exceeds 30k, I feel like that's sufficient and I feel like I can spend that money in other ways. I do all my own repairs except HVAC, so that's a considerable savings.

When looking at Capex, most of my houses are 900 square feet or less. So Capex is much less than larger, Class A or B houses. They have one water heater, not 2, several have window unit AC's, less than 75 bucks on Craigslist if one goes out. 4 of them have vinyl siding, so no paint costs for the foreseeable future. I can reroof a simple small roof by myself in a weekend, and around here, we get enough hail storms that insurance will usually provide a new roof every 10 years or so.

This works for me.  Everyone's situation is different.

Thank you for the advice it goes along with what I’ve been pushing towards.

On my 3 unit multi's I like to have at least 5k per building sitting an account at all times.  A roof will run 10k, boiler 5k etc.   It can go quick!!!

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