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Updated over 11 years ago on . Most recent reply

User Stats

353
Posts
85
Votes
Sean Kuhn
  • Minooka, IL
85
Votes |
353
Posts

Maintenance and Cap

Sean Kuhn
  • Minooka, IL
Posted

I purchased a property recently for X amount of dollars. I put 12k into it. This was for appliances, ac, electric and other cosmetic stuff. When figuring my cap I allow 20% for vacancy and maintenance and also PITI. Now when figuring my purchase price do I use the original X because I'm allowing 10% for these repairs and it will even out someday, or do I use X + 12k. I was thinking just using the original X number because now the ac won't need repairing for another 10 years, appliances are good for 5 to 7, etc. and I think over a 10 year period it will even out. What do you guys think?

Most Popular Reply

Account Closed
  • SFR Investor
  • Chicago, IL
6
Votes |
34
Posts
Account Closed
  • SFR Investor
  • Chicago, IL
Replied

@Sean Kuhn

I am not sure I understand your question. When you say "when figuring out my purchase price." Isn't your purchase price "X amount of dollars?" Do you mean when figuring out CAP? If yes, then you should use the purchase price plus the amount you had to spend to bring the property to rent ready condition.

Also, 20% seem a little light for vacancy, maintenance and PITI.

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