How to estimate repairs and maintenance

[Brianna Wickham]

New to investing - what’s a good rule of thumb to budget as a cushion for normal home maintenance and repairs (IE: roof replacement, HVAC replacement, etc) for an older home versus a newer home? 

[William Anderson]

I recommend that you have at least six months in reserves before you buy.  Create your budget for the next five years, buy and hold.  

Estimate the cost of replacement for each of the items during your ownership.  For example the water heater is a 10 years item but it's 8 years old.  Accrue for that every month for the next two years.  Same with all of the big items.  

You need to set aside the accrued funds in a savings account or CD for expected replacement. You are asking the right questions.  Often I see new investors spending 100% of the income and putting zero away for the eventual replacement.

Failure to accrue means that you will be paying out of pocket at the worst time possible.  If you decide to sell to avoid putting on the roof, you will take a hit on the selling price usually greater than the actual cost of the roof as an example.