Quick underwriting habit I had to unlearn: treating CapEx like optional fluff when the photos look good.

A “renovated” kitchen or new paint doesn’t mean the big-ticket stuff is done. Roof age, water heater, HVAC, sewer lateral, appliances near end of life — those still hit you on a buy-and-hold, usually on a schedule that ignores how nice the listing photos were.

My simple rule now: every deal gets a CapEx line, even the ones that look turnkey. I pick a monthly reserve that feels boring and slightly high, then stress the cash flow with it in. If the deal only works with CapEx at zero, it doesn’t work. I’d rather pass early than “find out” in year two when the water heater and the HVAC both decide to quit in the same winter.

I’m not trying to predict every dollar. I’m just refusing to model a fantasy expense sheet. CapEx is real. Zero is a marketing number, not an underwriting number.

Curious how you all handle this:
Do you use a flat monthly CapEx reserve on every property, or do you itemize by system age?
And if a seller pushes “it’s fully updated, no CapEx needed,” do you still keep the line in the model?