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Posts: 2
Reply with quote  #1 
Hi. Looking for some advice. How much should I plan to put aside every month in the event of repairs and maintenance? Is there a generally accepted percentage of the lease that people use?


Posts: 3,814
Reply with quote  #2 
Good question!  The percentage of maintenance that you set back varies with the property.  Look at your property - how old is it, how old is the roof, the electrical system, the furnace, the plumbing, the appliances?  Look at all the big ticket items and figure out how many are over 1/2 their life expectancy already.  (It seems that anytime an item comes close to the end of its life expectancy, it fails.  They just don't make things like they used to.)  Figure out how much it would cost you to replace one of these big items.  Try to save 1/10 of the total cost of these each year.  So if the roof is nearing the end of its life and its going to cost $12,000 to replace, try to save $1200 per year or $100 per month for maintenance.  Its not a foolproof system, but it gives you a general idea of what you need to save.

Big complexes budget for the replacement of these systems on a yearly basis (ie:  replace roof in 2008, water heaters in 2011, furnaces in 2015, etc.)  They build in a maintenance budget to allow them to save up enough for all the big items by the time they are due for replacement.  Then if they last a few extra years, they get to collect interest on the money until its needed.  Its also a good idea to save a little extra because you never know when a tenant is going to destroy something in the unit from carelessness or stupidity.
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