10% for maintanence

[Samir Shahani]

I am always puzzled why people allot 10% of rent for maintenance... 

I've talked to so many people and read so many posts of situations where the allotment is 10% regardless , eg.

Imagine a situation where the rent is $850/mo and the person allots $85 for maintanence.  In the same world (maybe a different city or maybe a slightly nicer part of town), another person is putting up a similar place in terms of age, size, condition, etc for $1600/mo and uses $160 as the allotment.

This is quite a different amount of money for two properties that may require similar maintenance costs.

I do it quite differently on my properties and am always looking to understand everyones point of view ... 

Can those who use this 'rule of thumb' stir up some conversation and defend your rationale?! 

[John Warren]

@Samir Shahani I personally use 5% for maintenance and 5% for capEx in my properties in the Berwn area. Our rents are solid ($1200 for a 2 bedroom unit), so 5% typically covers the maintenance costs we run into.  However, I use 10% for my lower end properties in Indiana as the rents are lower ($575 for a 2 bedroom). As you mentioned, a toilet costs the same amount no matter which property it is going into. Also, tenants don't tend to trash nicer places so the wear and tear can be measured over decades, not years. 

I have also experimented with a $ per door method. Locally, $40 per door per month seems to work fine. In my Indiana properties, I have seen real costs be closer to $100 per door per month.