Author Topic: How to budget for maintenance on rental property?  (Read 1623 times)

NestEggChick (formerly PFgal)

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How to budget for maintenance on rental property?
« on: August 13, 2014, 03:44:15 PM »
I have never owned property. Now, I'm considering buying a 3-family home, living in 1 apartment and renting out the other 2. I'm trying to run the numbers to see if this makes financial sense, but I'm stuck on one: maintenance and repair costs. How do you usually estimate something like this before you have a specific property in mind? Any place I buy would need to be in decent condition with good bones, but it would probably be around 100 years old (give or take.) This is in the Boston area. What number would you use?

And if anyone has experience with this in the Boston area and feels like sharing any general tips, I'd be very grateful!

frugally

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Re: How to budget for maintenance on rental property?
« Reply #1 on: August 13, 2014, 04:58:25 PM »
I always hear 15% of the rent combined for maintenance and capital expenditures (e.g. roof, siding).  So for a multi-family dwelling pulling in $2000/month, you'd budget $300/month in repairs + cap ex.  Others say 15% on single family 13% on multi-family, but haven't heard definitive evidence either way.

Daleth

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Re: How to budget for maintenance on rental property?
« Reply #2 on: August 13, 2014, 05:07:57 PM »
I always hear 15% of the rent combined for maintenance and capital expenditures (e.g. roof, siding).  So for a multi-family dwelling pulling in $2000/month, you'd budget $300/month in repairs + cap ex.  Others say 15% on single family 13% on multi-family, but haven't heard definitive evidence either way.

That seems high to me. I've never spent that much on maintenance, unless spiffing a place up (refinishing floors etc.) to attract better tenants counts as maintenance.

thedayisbrave

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Re: How to budget for maintenance on rental property?
« Reply #3 on: August 13, 2014, 05:12:57 PM »
This is definitely one of the more difficult costs to calculate & depends on multiple factors.  I estimate about $2000 per year on my condo.  I've spent a few hundred bucks about 3-4 times over the past year and a half replacing old/broken appliances, etc.  Also spend about $500/year on a home warranty.  It's already saved my butt - had the HVAC go out which is a $2000 replacement cost - they covered it :) So that may be another option... yes, more out of pocket now but a little bit more protection. 

anbeha5754

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Re: How to budget for maintenance on rental property?
« Reply #4 on: August 13, 2014, 05:21:51 PM »
I would head to BiggerPockets.com (real estate mogul gathering over there). Charts, books, investors, in every area you're interested in.

NestEggChick (formerly PFgal)

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Re: How to budget for maintenance on rental property?
« Reply #5 on: August 14, 2014, 09:04:00 AM »
Thanks everyone!