“Estimating Rental Property Maintenance Costs, Have you heard of estimating how much money you’ll need to set aside for maintenance on a rental property?”
Listed below are a few choice formulas for your estimating purposes. Which formula is your favorite?
50% Rule: total operating costs (repairs, maintenance, taxes, insurance) will equal half of your rental property income. So if your property rents for $1,200/mo, you should expect $600 of that to go to keeping the property up and running.
1% Rule: maintenance will cost about one percent of the property value per year. So a property valued at $190,000 should cost $1,900 a year to maintain (or $160 a month).
Square footage formula: Plan on $1 per square foot for yearly maintenance costs. So a 2,200 foot rental should cost roughly $2,200 a year in maintenance costs.
5x rule: maintenance costs will average 1.5 times the monthly rental rate. So if your home rents for $1,200, then you should anticipate spending approximately $1,800 a year in repairs.
Murphy’s Law: anything that can go wrong, will go wrong.
While it’s nice to have a rough guess on how much money you should plan on spending on maintaining your rental property, there are just too many variables to accurately estimate. Like the English language, there are exceptions to every “rule.” So use whatever formula you prefer to predict your cost, but keep in mind these two estimates:76% of yearly rental property maintenance and repair costs will be higher than you’ll expect 99% of rental property repair and maintenance expenses will be higher than you’ll want.
Arizona is a hot spot for people looking to buy a house. The state has the second-highest rate of homeownership in the country, with two-thirds of homes being owner-occupied. It also ranks near the top when it comes to home price growth, so if you're considering selling your house, now may be a perfect time! […]
A Guest Post From OasisAdvisor When it comes to such an important aspect in your life or the life of a senior you know and love, you want a trusted advisor to guide you every step of the way. Being proactive and planning is the best approach. We want you to know that we understand […]
Things You Can and Cannot Do: When You Have an Exclusive Contract with a Real Estate Agent? Having an exclusive contract with a real estate agent leads to numerous benefits, some expected and perhaps even unexpected. However, when a real estate agent asks you to sign an exclusive contract with him or her, he or […]