Portland, ME · Member since 2018 · 3 posts · 0 votes
How do you guys generally calculate what % of money should be set aside on a monthly basis to cover any unknown repairs? I've read metrics such as 1.5 - 3% of the value of the property?
Additionally, let's assume the property is fully rehabbed (3 units, now worth 1M) - gutted to the studs, new electric, new plumbing, new walls, new kitchens / baths... etc... would you still apply the same % or calculation on how much to set aside each month?
The general practice is 5% - 10% of monthly income. It depends on the condition of the property and quality of tenants. A newly rehabbed property in a decent neighborhood I would use 5%. I would never go below 5% of income.
Investor · Morrisville, NC · Member since 2012 · 1k+ posts · 673 votes
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@Adam Gerber . For repair and maintenance I would usually go with 5-10%, depending on the age and the type of property. But, there is also Capex expenses: HVAC, Roofs, Water Heaters. If these are getting close to end of life, then you need to plan for more expenses.