When using the calculator for a quick analysis, should I ignore the 50% rule when I put in "10%" for CapEx and repairs? It should be one or the other, but not both calculations, correct? THANKS!
Real Estate Investor · York, PA · Member since 2018 · 115 posts · 58 votes
7y
I'm not entirely sure how to answer this, but hopefully it helps to say that to my knowledge you should not include CapEx costs in the 50% rule because they are not "operating expenses", while repairs/maintenance ARE operating expenses and should be included.
Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes
7y
@Billie Young, the 50%-rule is for a truly "quick analysis" (in your head). I really don't like the 10% number you suggest above because taxes vary SO MUCH from market to market and town to town.
Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
7y
@Billie Young the 50% rule is all expenses. Taxes, insurance, maintenance, etc.... capex is simply capex. Use the 10% for capex and add all of the other expenses in the calculator as well.
@Hunter Locke a realtor friend just suggested 10% for Capex and 10% for repairs on a monthly basis. Again, just a starting point when looking at potentials. I just wondered if I need to type "10%" into the calculator if I look at the 50% rule tab. P.S. I'm in Florida, too! :)
Rental Property Investor · Boston · Member since 2014 · 103 posts · 21 votes
7y
IMO this is way too broad of a question. These numbers are completely local. I know for some of our properties we can get away with 5% capex but others we budget 12% because they’re super old. Also the 50% is a little low for us... it’s usually 55%, but I guess for a quick analysis that works.