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Funded Reserves and Capital Improvements

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One reason you might need to set aside funded reserves is to pay for capital improvements in a future year. For example, suppose you plan to do some rehab work that will cost $30,000 in year 1, and $20,000 in year 2. You want the total of $50,000 to be part of your initial investment.

You would enter the $30,000 as Capital Improvements from Initial Investment in cell D87 of the “Cash Flow & Resale Assumptions” worksheet.

You would then enter the year 2 amount of $20,000 in 3 places:

  • in cell D90, as Funded Reserves from Initial Investment,
  • in cell E94, to apply these reserves in year 2, and
  • in cell E88, to show the actual year 2 capital improvements.

Also, check the “Apply reserves (if available) as follows” checkbox in row 94. When you are done, the “Capital Improvements & Funded Reserves” section will look something like this:


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