Why Plan for Capital Expenditures?

Major components of a property—like the roof, HVAC system, or plumbing—wear out over time. Setting aside funds each month ensures you can handle these large costs without dipping into emergency savings or taking on expensive debt. Investors often budget a percentage of the property’s value annually for these future expenses. This calculator converts that yearly figure into a convenient monthly reserve amount.

Using the Calculator

Enter the current market value of your property and the percentage you expect to allocate toward capital expenditures each year. Common ranges fall between 3% and 8%, depending on the property’s age and condition. The calculator multiplies these values to find the annual reserve, then divides by 12 to show how much to save each month.

Example Calculation

If a $250,000 rental property requires 5% of its value for yearly improvements, the annual reserve totals $12,500. Dividing by 12 results in a recommended monthly set‑aside of about $1,042. Adjust the percentage upward for older buildings or if you anticipate significant renovations.

Beyond the Basics

Capital expenditure planning isn’t just for landlords. Homeowners can use similar calculations to prepare for long-term maintenance. You might also track specific items—like a roof or water heater—and schedule replacements over time. Consistent saving smooths out large expenses and keeps your property in top condition.