The Money Mustache Community
Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: FrugalFisherman10 on January 10, 2017, 08:22:57 AM
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What do you think is a good amount (%) to budget for home repairs?
I've seen it as 1% of the home price, up to 4.5% of the home value..etc. I'd prefer the mustachians expertise/thoughts on this as opposed to 'normal internet' garbage.
Thanks
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It all depends on the age and condition of the house. How much life the roof has left? Same for flooring, plumbing etc. If it ain't broke, don't fix it. But have a emergency fund available for repairs.
I first mention roofs because on older houses, that is the first major repair most will face. Get an idea of how much a replacement roof will run in your area and be prepared for it when the old roof is done. Better to fix it before it leaks causing more damage and more costs.
That's how I roll!
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The text book answer is 1% of the cost of the home. However I budget 10% of the rents on a rental property.
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Ok for a more specific example..how about on a 850 sq ft condo built in 1930, with an HOA fee of 325/month, owner-occupied and bought for $170k?
Given the HOA should be there for replacements of things like the roof, plumbing?, exterior maintenance (painted brick), etc. how much more would you set aside for repairs?
The 1% of home value rule would suggest $140 a month (or $1700 per year). But how do people deal with/treat the HOA in this example?
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HOA can be bad or OK. There is no free money and if something big comes up you might get a special assessment or the association might have cash reserves.
How old are the pipes, how about the electrical, is the brick work in good shape? Is a new retaining wall needed?
I just had to replace my hvac unit to the tune of 4500$, other than than in the last 9years it was just a new water heater and some small stuff. So I averaged ~600/year + 150$/mon in condo fees.
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In 20 years you probably need a new kitchen and bathroom.
A new kitchen and bathroom would cost at least $30,000 in a Condo. If you divide that by 20 years, you need to save $1500 a year just for a new kitchen and bathroom!
If you plan on holding it on for 30+ years, you will renovate it at some point.
I'm curious do people really budget for kitchen and bathrooms?
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I'm curious do people really budget for kitchen and bathrooms?
I do. Right now, I'm saving money for a new roof (probably five years from now, and around $15k) and a new master bathroom. My in-laws had it remodeled in the late '80s, and when I say remodeled, I mean it looks as if they hired people who had never seen or used a bathroom in their lives. I haven't looked into the cost on that yet, but I'm assuming another $15k or so.
I'm not saving for a kitchen yet. We replaced the appliances in 2010, so they're good for now. It could use updating, but it's fine.
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Aside from keeping the structure and systems in good shape (roof, windows, HVAC), I don't spend much on renovation. We had 20 year-old wall-to wall in the house when we moved in and replaced it with laminate. The bathrooms have "outdated" lighting. We could not care less. It's perfectly functional. I have lived with pink tile and turquoise tile in my bathrooms, and it's amazing what you can do with paint and fabric to make those colors work. We do have yellow Formica counters in the kitchen that were painted with Rustoleum. We will replace them with granite-look Formica when I get around to it. All around me people are ripping perfectly functional stuff out of their houses. I just don't get it.