Operating expenses
CapEx (Capital Expenditures)
Reserves for large infrequent repairs — roof, HVAC, water heater. Typically 5–10% of rent set aside each month.
Why CapEx (Capital Expenditures) matters
Capex differs from maintenance — these are the BIG fixes (roof = $10-20k, HVAC = $5-10k). Even at 5% of rent, you're only saving $100/mo on a $2k rental, which doesn't cover a roof replacement in 10 years. Adjust upward for older buildings.