Annual repair/maintenance cost estimates?

[Chris Stromdahl]

Assuming that I am working with a property management firm, what are you using as an annual repair estimate for budgeting/deal analysis purposes?

• % or gross rents?
• $1000 per year?

What is your basis for this method?

Thanks, Chris

[Bill Jacobsen]

I am sorry I wasn't completely clear.  The $1,000 a year is the maintenance.  Some years it can be more and sometimes less.  If it is less I don't save.

The capital reserves is for large items that don't occur every year but do occur every 5 to 30 years.  An example would be a new roof for $8,000.  That is $267 per year if current roof is new.  If it has only 5 years left then that is $1,600 per year.  I keep that money in reserve.

I actually limit that amount to $.67 per square foot up to $1,000 for a 1,500 foot house or larger.

For multi-families, I use what I think is right. Depending on number of units I will use $500 or more for maintenance. I will look at square footage of entire building and the $.67 per foot again. If there are HOA fees they usually cover the outside. I will probably keep maintenance the same and cut reserves in half.

Good Luck.

Bill