What is CAPEX in real estate?

CapEx is simply an abbreviated term for Capital Expenditures. Examples of Capital Expenditures or CapEx in real estate include costs such as buying a property, making substantial upgrades (like adding a new room, renovating a kitchen, or installing a new roof), or making large-scale repairs (like replacing the HVAC system).

What are capital expenditures (CapEx) in real estate?

In real estate, Capital Expenditures (CapEx) typically refer to large, significant costs that are incurred to extend the useful life of the property or increase its value. These are not routine maintenance costs, but rather infrequent, substantial investments. Here are some examples of expenses that are typically considered CapEx in real estate:

What is the CAPEX formula?

The CapEx formula is a straightforward way to calculate a company’s capital expenditures. It involves a simple mathematical expression: CapEx = PP&E (current) – PP&E (previous) + Depreciation (current) The formula comprises three essential components: