Real Estate Investing Glossary
Capital expenditures
Capital expenditures, or CapEx, are larger costs that extend a property's life or improve it, such as a new roof or air conditioning system.
Capital expenditures, or CapEx, are larger costs that extend a property's life or improve it, such as a new roof or air conditioning system. They are different from routine repairs.
Why it matters to a Las Vegas investor
These costs are infrequent but large, so plan for them in advance and include them in your estimate. A rental that ignores CapEx can overstate its real cash flow.
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Questions about Capital expenditures
How is CapEx different from a repair?
A repair restores something to working order. CapEx replaces or upgrades a major component.
Why set money aside for CapEx?
Large costs arrive unevenly, and reserves keep them from disrupting your finances.