The costs of being a landlord of a rental property involves more than just the obvious costs. These costs include vacancy costs, repair costs and management costs. The hidden costs are called Capital Expenditures (Capex) and include the big ticket items like replacing a roof, appliances, driveway and plumbing expenses that can’t be predicted. CapEx expenses can be estimated by how many years the item will last and dividing by that many months to get the monthly CapEx expense that should be set aside for future expenses.
- CapEx is very difficult to estimate because there is so many different factors that go into it.
- Some factors that go into estimations of CapEx expenses are roofs, HVAC, flooring and plumbing.
- The problem with estimating CapEx is that the estimates always treat everything as new, and that is very rarely the case. Often times, things need to be repaired or replaced such as plumbing or paint.
“More formally known as capital expenditures, CapEx are those expensive “big ticket” items that need to be replaced every so often, but not every month or year.”