Capital expenditures are needed to purchase or improve long-term assets such as land, buildings, or equipment. When a property investor acquires, improves, or replaces a long term asset, the expense is considered a capital expenditure and should be depreciated over the proper schedule.
The funds for capital expenditures come from a company's savings, from the sale of assets, or from borrowing. Capital expenditures are important for landlords because they are a way to invest in the property and make it more valuable. This, in turn, allows landlords to increase the rent they charge and make more money in the long run.