What goes into calculating the CapEx in a deal analysis?
Hi BP Community,
I'm a total newbie to real estate investment game and I've been analyzing a few deals. My question is, what do you all including as a CapEx in your deal analysis?
CapEx should include everything that has a lifespan right? So for example, according to Google, a dishwasher has a lifespan of about 10 years, a garbage disposal is about 8 years, and an air conditioner is about 12 years.
Sticking with the dishwasher example from above, at my local big box store, the mid range model of dishwasher is about $600 dollars. So $600/10 years/12 months = $5 per month of CapEx for the dishwasher. I did this with everything in my personal residence that has a lifespan and came up with about $150 per month of CapEx.
Since I'm totally new to this, I conservatively estimate that I can get $600 per month in rent, so 25% of my rent is a CapEx. When I entered this into the BP buy and hold calculator, it actually gave me a warning that it should be a percentage of the monthly rent instead of the monthly amount.
What are your thoughts? Does this sound about right?
Thanks for the help,
Pete