Estimating Repairs & Maintenance

[Daniel Becker]

Hi everyone -

I am new to investing in real estate and new to BiggerPockets. It seems like a great community so far and I’m happy to participate!

My question is how best to estimate repairs & maintenance costs:

Everything I read suggests taking 5% to 15% of the annual income, depending on the age and condition of the property, to estimate repairs & maintenance costs.

It seems to be a bad way to estimate costs, specifically when looking at a single-family residence in a location such as California.

For example…

a 2,000 square foot house in California that generates $54,000 in annual rent vs. a 2,000 square foot house in Tennessee that generates $18,000 in annual rent.

The houses are practically identical in size, age and condition, yet if I use 10% to estimate repairs & maintenance we are looking at $5,400 vs. $1,800. I understand that repair costs will vary from location to location, but that’s a $3,600 difference.

Would it be better to use a cost per square foot approach to estimate repairs & maintenance? Something like $2-$4 per sq. ft. depending on the location, age and condition of the property?

Thanks, Dan