Capital Expenditure (CapEx) Reserve

Reserve for major replacements (roof, HVAC, appliances) — default 8% of EGI.

Definition

CapEx covers big-ticket items with multi-year lifespans. A roof lasts 20-25 years. An HVAC system lasts 15-20. Reserving monthly means you are not blindsided when these come due. This is separate from maintenance (routine repairs).

Formula

CapEx = EGI × capex_reserve_pct (default 8%)

How Kaison Uses This

Configurable via operating_expenses.capex_reserve_pct.

Example

$1,518 EGI × 8% = $121/mo

Pro Tip

New roof and HVAC during rehab? You can justify 5-6% for the first 10 years.

Related Terms

Effective Gross Income (EGI)

Gross rent minus vacancy — the realistic income baseline.

Maintenance & Repairs Reserve

Reserve for routine repairs and upkeep — default 12% of EGI.

Total Operating Expenses

All recurring costs: management + maintenance + capex + insurance + tax.

Property Insurance

Monthly insurance premium for the property.

Educational content only. Consult a CPA or attorney for advice specific to your situation.