If it doesn’t make dollars, it doesn’t makes “sense”. How much should you expect to spend on maintenance for your rental home?
One of the hardest conversations we will have in our relationship with our Clients is the call where we tell them that something is broken and we need to spend their money. I often tell people who ask about our industry, “If you can make that call, you can make any call.”
Many savvy Clients have asked on the front end what they should expect or budget for a yearly maintenance expense.
I’ve been managing my own homes since 2004 and managing for others since 2008. I had a general idea of how much money each house was spending, along with the factors that cause that to go up or down, but I had one question that I wanted to check first . . .
How much can the average homeowner (who lives in a home) expect to spend?
Then naturally, you could expect to spend MORE than that with a tenant in the home; since as a homeowner, you probably do some of the work yourself. Also, you own the home, so you aren’t as naturally hard on it as the average tenant. We are speaking in complete generalities, but I hope you get my point. We have great tenants, but the average doesn’t take care of the home the way the average homeowner who is living in that home takes care of it.
While doing some research, I ran across an interesting article that did a great job (based on my experience) of explaining the factors that affect the yearly maintenance of a home and some general formulas to work with. They were startlingly close to what I was thinking, so I decided to include it here versus regurgitating the information they so eloquently provided.
While the 1% rule and the Age Rule (both cited in the article) are a great start, I think it is most important to point out all the other factors that affect the maintenance costs. When people ask me this question, my first response is . . .
1. How old is the home? Older homes simply cost more to maintain. This is one place I differ from the article. I don’t care how well you’ve taken care of the home, a home that was built 100 years ago will cost more to maintain than a home built 5 years ago.
2. When was the last time you updated the major systems of the home – electrical, plumbing, hvac, roof, etc? These major systems are big ticket items and can move the needle very quickly on how much you spend on the maintenance.
3. Where is the home located? This speaks to the type of tenant who traditionally will live in the home. If you have a low income person who lives on a monthly subsidy, then chances are they run the air twice as much and flush the toilets twice as much; i.e. causing these types of items to wear out much faster.
Being prepared for us to call you for a repair item can make all the difference in the world. Homeowners who live paycheck to paycheck should actually consider not renting if a phone call to tell you about a $750 item is going to keep them from having Thanksgiving that year.
If you have questions about your current situation or would like to find out more about budgeting for maintenance items and rental property, please reach out to us via the link below. We’d love to help.