What is Capex in Real Estate?
What is Capex in Real Estate?
In real estate, CapEx (short for Capital Expenditures) refers to major outlays of cash used to acquire, improve, or extend the life of a property. These are typically one-time, significant expenses that add long-term value—unlike operating expenses (OpEx), which cover day-to-day operations and maintenance.
Examples of CapEx in real estate include:
- Replacing or upgrading a roof, HVAC system, or other major mechanical systems
- Renovations or structural improvements that enhance a property’s value or functionality
- Building expansions or additions
- Significant electrical or plumbing overhauls
Because these expenditures generally boost a property’s value or lifespan, they are capitalized on the balance sheet rather than fully expensed in the current accounting period. This distinction is important for investors, property owners, and lenders when they analyze a real estate project’s financials.
