> ## Content Index > Fetch the complete content index at: https://landlordsheet.com/llms.txt > Use this file to discover other available public pages before exploring further. # How Much CapEx Reserve Per Unit? Build Your Own Number Instead of Guessing - URL: https://landlordsheet.com/capex-reserve-per-unit/ - Published: 2026-10-16T13:51:32.000Z - Updated: 2026-10-16T14:02:34.000Z - Description: Skip the one-size rule of thumb. List the big components, estimate their remaining life and cost, and you'll know exactly what to set aside per unit each month. - Author: Jon - Tags: Operations, Deal Analysis Repairs are the leaky faucet and the broken closet door. **Capital expenditures (CapEx)** are the big, predictable-but-irregular hits: the roof, the furnace, the water heater, flooring at turnover, the driveway. They're predictable because everything wears out. They're irregular because they don't arrive on a schedule. That's exactly why small landlords get blindsided: the property "cash-flows" for three years, then a single month erases all of it. The fix is a **CapEx reserve**: money you set aside every month, per property, so the replacement is already paid for when it's due. The question is how much. ## Why rules of thumb only get you started You'll hear a lot of shortcuts: a fixed dollar amount per unit per month, or a percentage of rent. They're handy when you're screening deals quickly. But they ignore what actually drives your CapEx: - **Age and condition.** A house with a brand-new roof and HVAC needs far less set aside this decade than an identical house with 20-year-old systems. - **Replacement costs in your area.** Labor and materials vary a lot by region. - **Property type.** A single-family home has one of everything per door. A fourplex may share one roof across four units. - **Rent level.** A percentage-of-rent rule over-reserves on expensive rentals and under-reserves on cheaper ones, even though a water heater costs about the same in both. So use a rule of thumb to screen a deal, then build a real number once you own it (or during due diligence). ## The component method, step by step ### 1\. List the big components Walk the property, or read your inspection report, and list everything expensive that will need replacing: - Roof - HVAC: furnace, boiler, central air, heat pumps - Water heater(s) - Appliances: refrigerator, range, dishwasher, washer and dryer - Flooring: carpet, LVP, hardwood refinishing - Interior paint (often at turnover) and exterior paint or siding - Windows and doors - Driveway, parking, sidewalks - Electrical panel, plumbing fixtures, sewer line - Anything property-specific: a deck, a septic system, a pool ### 2\. Estimate replacement cost Use real numbers: past invoices, contractor quotes, or the cost from your last turnover. When unsure, get a quote. It's free and much more accurate than guessing. ### 3\. Estimate expected life and current age Lifespans depend on quality, climate, maintenance and how tenants treat things. Manufacturer guidance, your inspector and local contractors are the best sources. Your inspection report often notes approximate ages. A water heater's manufacture date is usually printed on its label. ### 4\. Calculate remaining life > Remaining life = expected life − current age If the result is zero or negative, that item is living on borrowed time. Plan for it in the next year. ### 5\. Calculate the monthly reserve per item > Monthly reserve = replacement cost ÷ months of remaining life That spreads each replacement evenly over the time you have left to save for it. ### 6\. Add it up and divide by units Total the monthly reserves for the property, then divide by the number of units to get your **per-unit** number. ## A worked example (hypothetical numbers) A duplex with these components: | Component | Cost | Age | Life | Remaining | Monthly reserve | | ---------------- | ------- | --- | ---- | --------- | --------------- | | Roof | $14,000 | 17 | 25 | 8 yrs | $146 | | Water heater A | $1,600 | 9 | 10 | 1 yr | $133 | | Water heater B | $1,600 | 4 | 10 | 6 yrs | $22 | | Furnace (shared) | $7,500 | 12 | 18 | 6 yrs | $104 | That's about **$405 per month** for these four items, or roughly **$203 per unit**, before you add appliances, flooring and paint. Notice how much the one water heater near the end of its life adds: it needs its full cost saved within a year. Once replaced, its reserve drops sharply. That's the real advantage of this method. It tells you **when** the money is needed, not just how much on average. ## Look ahead ten years A per-month number is useful, but a ten-year schedule is where you see the lumpy reality: two years with nothing, then a roof and a furnace close together. Lay out each component's due year. After it's replaced, it comes due again one lifespan later. Add a modest inflation assumption to costs. Then run your reserve balance forward: > Year-end balance = last year's balance + 12 × monthly contribution − replacements due that year If the balance goes negative in any year, you have three choices: contribute more now, plan to replace something early or late (if that's safe), or line up financing in advance. All three are better than finding out the day the roof leaks. ## Where to keep the reserve - **A separate account per property** (or at least one dedicated reserve account) keeps you from spending it by accident. - **Automate the transfer** each month when rent arrives. - Some landlords keep reserves in a high-yield savings account. Compare rates, fees and deposit insurance before choosing. ## How CapEx affects deal analysis When you analyze a purchase, put CapEx in as an expense line even though you won't pay it every month. A deal that only cash-flows when CapEx is zero isn't really cash-flowing. In the [Rental Deal Analyzer ($19)](https://payhip.com/b/vNzcd?ref=landlordsheet.com), CapEx is its own input for exactly that reason. See also [how to calculate cash-on-cash return](https://landlordsheet.com/how-to-calculate-cash-on-cash-return/). When a big replacement does happen, record it properly. Replacements are usually capitalized and depreciated rather than deducted all at once, but rules (and safe harbors) are nuanced, so ask your tax pro. The [Rental Bookkeeping Workbook ($27)](https://payhip.com/b/IJ4pL?ref=landlordsheet.com) keeps repairs and improvements separate so your CPA can sort out the treatment, and the [Tax Prep Packet ($24)](https://payhip.com/b/QqvyS?ref=landlordsheet.com) helps you hand over a clean year-end package. ## Tools to make this painless A [**CapEx & Reserve Planner ($15)**](https://payhip.com/b/nZYiv?ref=landlordsheet.com) spreadsheet that does everything above (component list, remaining life, monthly reserve per property and per unit, a ten-year replacement schedule and a reserve balance projection) is available now in [the Toolkit](https://landlordsheet.com/toolkit/). Until then, the [free Single-Property Tracker](https://payhip.com/b/DORST?ref=landlordsheet.com) is a good place to start tracking what each property really costs you. ## Quick checklist - \[ \] List every major component, with cost, age and expected life - \[ \] Calculate a monthly reserve per item and per unit - \[ \] Build a ten-year schedule and check for negative years - \[ \] Set up an automatic monthly transfer into a separate reserve account - \[ \] Revisit after every replacement and once a year ## Related reading - [Rental property expense tracking spreadsheet](https://landlordsheet.com/rental-property-expense-tracking-spreadsheet/) - [Landlord tax deductions checklist](https://landlordsheet.com/landlord-tax-deductions-checklist/) - [Schedule E categories for landlords](https://landlordsheet.com/schedule-e-categories-for-landlords/) Want one practical landlord tactic each week? [Subscribe free](#/portal/signup). ### Save with a bundle - [**Investor Pack ($39)**](https://payhip.com/b/CGreg?ref=landlordsheet.com): [Buy the bundle →](https://payhip.com/b/CGreg?ref=landlordsheet.com) - [**Complete Landlord Library ($89)**](https://payhip.com/b/Ta5id?ref=landlordsheet.com): [Buy the bundle →](https://payhip.com/b/Ta5id?ref=landlordsheet.com) --- *This article is for general educational purposes and is not financial, tax or engineering advice. Component lifespans vary widely; rely on inspectors and contractors for condition assessments and on your tax professional for depreciation questions. Example figures are hypothetical. — Jon, Everyone's Landlord*