CapEx Projections Question

4 Replies

I grabbed these numbers from 'The Millionaire Real Estate Investor' book. I've been adjusting the LifeSpan based on the situation. For example, If the roof was put on 10 years ago, I would change from 25 to 15...ect. I normally still end up with numbers around $175-$200 for the total per month. SO, when I go to use the Rental Calculator Tool...a lot of times this ends up being a CapEx % of around 20%. So I'll usually have Vacancy 5%, Repairs 5%, CapEx 20%, and Management of 10% . Am I doing this correctly?

Matt,

nice chart, i don't think i read that book, if i did, i don't remember that chart/ the breakdown. If you are saying that the typical rent for the house is about $900 / month then figuring in all those expenses to make sure you are covered, then yes your CapEx would be 20%.

Matt,

That's a good chart to start. Honestly, i think most estimate capex.

Using expenses looking something similar to this on my side

15-17 percent for insurance and property tax

10 percent for repairs

10 percent for capex

5 percent for vacancy

Or around 40 percent give or take

In my short time, it seems the repairs at 10 percent, may be too high.

You are doing it right. However, some of those expenses don't happen.

For example, not every house, has foundation work thats needed even if you hold the house 50 years.

$2500 for a repaint every 5 years is probably a bit high as well.

Based on each individual situation.

Your real life Capex, probably will be between 12-15 percent

Repairs between 5 and 8 percent of gross.

I account for 20 percent for capex and repairs.

At the end of the day, it's just estimates.

You need to account for all the things listed above.  If you do that, on a percentage of rent, and the home still cash flows decently(100-200 a month) then you probably got a pretty decent deal.

If you factor in those things, and you are negative after paying the mortgage, or its thin, probably should look elsewhere.