Capital expenses are the big replacements: roof, AC, water heater, appliances, flooring, paint. Each has a typical life, and each will need replacing.
Set a monthly amount for each
Replacement cost divided by its expected life in months gives the monthly reserve. Add them up for the property.
Adjust for age
An item near the end of its life needs a faster reserve, or a plan to replace it soon.
Our capital expense reserve calculator adds them up.
General information, not legal, tax or financial advice.
This article is general information, not legal, tax or regulatory advice. Rules change; confirm current requirements with the responsible agency or a licensed professional.
