13 Common CapEx Offenders Every Real Estate Investor Should Know
Real estate investing can be a lucrative business, but it’s not without its challenges. One of the biggest mistakes that new investors make is failing to account for capital expenditures, also known as CapEx. This can be a costly oversight, as CapEx can eat away at your profits and leave you losing money year after year.
So what exactly is CapEx, and how can you avoid falling victim to it? In short, CapEx refers to the big expenses that come with owning and maintaining a property. These expenses can include everything from a new roof or HVAC system to flooring, plumbing, and landscaping.
To help you prepare for these expenses, we’ve compiled a list of 13 of the most common CapEx offenders, along with their typical lifespan:
- Roof (25-30 years)
- Water Heater (7-10 years)
- Appliances (7-10 years)
- Driveway/parking lot (50 years)
- HVAC (20 years)
- Flooring (5-15 years)
- Plumbing (30 years)
- Windows (50 years)
- Paint (10 years)
- Cabinets/Counters (20 years)
- Structure (75 years)
- Components (15 years)
- Landscaping (10 years)
As you can see, CapEx can vary greatly depending on the item and its expected lifespan. Some items, such as the roof or HVAC system, can last for decades, while others, such as flooring or appliances, may need to be replaced every few years.
So how can you avoid being caught off guard by CapEx? The key is to plan ahead and budget for these expenses. When calculating your cash flow, be sure to set aside a portion of your profits for CapEx. This will ensure that you have the funds you need when it comes time to make those big repairs or upgrades.
In conclusion, CapEx is a crucial factor to consider when investing in real estate. By being aware of the most common CapEx offenders and their lifespans, you can better prepare for these expenses and avoid losing money year after year. So don’t let CapEx kill your cash flow – be proactive and plan ahead!