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.

Related terms

Maintenance Reserve
A planning reserve for routine repairs; the appropriate amount depends on the property's systems, co…
NOI (Net Operating Income)
Gross annual rent minus all operating expenses, before debt service and income tax.

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