What is R&M in Commercial Real Estate?
R&M, or repairs and maintenance, refers to work done on a commercial property that is designed simply to maintain the property’s current condition. This includes work done to prevent the further deterioration of building component or system or to replace a building component at the end of its useful life.
R&M vs. Capital Expenditures
R&M stands in contrast to capital expenditures, which can add significant value to a property. Examples of capital expenditures include installing a new roof, doing significant landscaping, or replacing/upgrading a building's security system. When doing accounting for your commercial real estate project, this makes a big difference. While R&M is classified as an expense, capital improvements are listed as an asset, since they add long-term value to the project.
In some cases, an R&M job which would initially be classified as an operational expenditure can become a capital expenditure if the scope of the repair project increases beyond maintenance. For example, a property owner might plan to replace a small amount of building carpet after a leak. However, after realizing the extent of the damage, they may decide to order new carpet for the entire building. In this case, the planned repair would likely be classified as a capital expenditure instead of an operational one.