Help with budgeting maintenance, capex, and vacancy for a SFH

[Austin Irwin]

Hello BP community,

I was hoping for some insight regarding budgeting for maintenance, capex, and vacancy for a SFH in Shippensburg, PA. This is my first rental, so I am a newbie. I have read that a popular rule is 5-5-5% of gross rent or something similar.

To give a little background, this is my former primary residence of five years.  The house rents for $1,300.  The market value is around ~180k but this is due to appreciation, not my purchase price five years ago.  The home is very basic: electric baseboard heat, no a/c, not many bells and whistles that will need to be maintained.  During my residence there, I took care of many capital/improvement related expenses such as new roof, new garage doors, etc.   Even without being able to look in a crystal ball, I can reasonably foresee that my only anticipated expenses in the near term will be wear and tear from tenants, appliance replacements, and a well pump eventually.

So my questions to all of you with much more experience than I are as follows:

1.  Would you see this 5-5-5% of gross monthly rent being adequate for upkeep and vacancy on the property?

2.  Without trying to overcomplicate things, for bookkeeping purposes do you continuously allocate these funds to these three buckets regardless of whether you ever need to tap into these funds?  For example, let's say I can go three years without a vacancy.  Do you still continue to allocate the 5% to the vacancy bucket every month because you know that eventually you will need to tap into it?  I can keep allocating if it would be prudent, but I don't want to tie up capital that I could redeploy elsewhere.

Thanks in advance for any insight!