CapEx vs. OpEx: The Line That Defines Your Valuation

Every investor should know where to draw the line between a repair and an improvement. Misclassification can inflate expenses, distort NOI, and mislead buyers or lenders.

CapEx (Capital Expenditures) Adds long-term value — roof replacements, HVAC upgrades, or major buildouts. These should be capitalized and depreciated over time.

OpEx (Operating Expenses) Keeps your property running — cleaning, utilities, minor repairs, or landscaping. These should be expensed immediately.

Why It Matters

• Keeps P&L consistent year over year.

• Maintains accurate valuations.

• Reduces confusion at tax time.

Pro Tip: Set a capitalization threshold (e.g., $2,500). Anything below gets expensed; above gets capitalized.

Takeaway: Consistency turns accounting from a chore into a valuation tool.

⚠️ This blog is for informational purposes only. It may not apply to your specific situation. Please consult your CPA.