Maintenance/repairs as a percentage

[Will Dean]

Hi All:

What percentage do you assign for repairs/maintenance when calculating cash flow?

Thank you! 

[John Warren]

@Will Dean I use 5% for maintenance and 5% for CapEx. A lot of this will depend on what type of neighborhood the property is located in. Most of my properties are located in good areas here in the Chicago suburbs, so my tenants don't beat them up to badly. If you are in a tougher area where you have lower rents, you might need to beef those numbers up more. I have seen some areas where investors will budget more like 10% for maintenance and 10% for CapEx, but the rents may be a lot lower. My rents are mostly in the sweet spot between 900-1200 per month.