Adding Costs

Input operating expenses and capital expenditures

Operating expenses (OpEx) and Capital expenditures (CapEx), are two of the largest sources of property cash outflows in a property model.

OpEx are costs required to operate and maintain a property (ex. utilities, insurance), while CapEx are more infrequent investments, typically scheduled in advance, that improve or extend the life of the property (ex. major repairs, roof replacement).

Both OpEx and CapEx costs have various options for modeling.

• Timing of payments, including start and end dates as well as payment frequency.
• Variability (how linked the costs are to occupancy levels).
• Percentage recoverable (if the costs can be recovered from the tenants).

Operating expenses

Operating expenses are the periodic expenditures required to operate and maintain a property such as property maintenance, utilities and real estate taxes. They are often the main sources of cash outflows.

Operating expenses can be marked as recoverable, an amount that tenants must contribute based on their signed agreement and allocation.

Capital expenditures

Capital expenditures are the major cash outlays used to improve or maintain properties that are expected to generate value over an extended period, typically more than one year.

CapEx not only includes physical upgrades to the property but also investments that enhance its economic value and revenue-generating capacity.

Leasing costs such as tenant improvement allowances and leasing commissions tied directly to a use should instead be input when entering leasing rules and usages.

Press continue at the bottom of the page to input the purchase and financing details.