What does capital expense refer to in property management?

Capital expense in property management refers to expenditures that enhance the value or extend the useful life of a property. These are typically significant investments aimed at improving the overall condition of the property, such as renovations, major repairs, or upgrades to facilities, which can lead to increased property value and possibly higher rents.

Routine maintenance costs, utility expenses, and insurance costs, on the other hand, are considered operating expenses. These expenses are necessary for the day-to-day functioning of the property but do not contribute to increasing its value in the long term. Understanding the distinction between capital expenses and operating expenses is crucial for effective property management and financial planning.