When you purchase a Baytown rental property, it’s important to account for unexpected expenses. Owning a rental property is a great investment—that is, until the roof leaks or a pipe breaks, or the HVAC just dies—in the middle of a summer heatwave, no less. Which begs the question: How much should owners set aside to take care of regular property maintenance and repairs? There are varying opinions on just how much should be set aside for breakdowns and routine maintenance.
The amount to set aside depends on the quality of the property, mainly its age. Newly constructed properties typically need fewer repairs since all the main components are brand new. In this case, the 1% rule of thumb is a step in the right direction. If you’re using the 1% rule of thumb, you should budget at least 1% of the property’s purchase price for maintenance. So, if you purchased the property for $250,000, you should budget a minimum of $2,500 for upkeep and repairs using this rule. But is that enough?
The annual maintenance costs for any property will vary, based on when the property was built, the materials and finishes used, and the home’s climate. The budget for repairs should be higher than 1%, therefore between 1% and 4% is more prudent. If your property is less than five years old, use the lower percentage of 1%, as most of your property’s equipment, appliances, building materials, fixtures, finishes, etc., are still relatively new, thus probably in good working condition. If your property is more than 25 years old, on the other hand, plan on budgeting closer to 4%.
An alternative to the 1% rule is the square-footage rule, which dictates putting away $1 per square foot of your property for annual repairs. However, this may not be the best budgeting gauge. A fixed price per square foot neglects to include some of the most important factors of maintenance costs, like labor costs for services. Property maintenance and repair labor costs vary across the U.S., so your budget should reflect your area’s rates.
The coronavirus pandemic added another level of wear and tear. For example, according to the HomeAdvisor report, 50% more people work from home, and 70% more are cooking at home. If people are spending more time at home, naturally, they will wear out appliances and equipment sooner.
Once you set a baseline of how much you think you should budget for property maintenance, the next step is to customize your numbers. Think about the bigger systems in the property, like the plumbing system, heating/cooling system, and waterproofing system (roof/siding/drainage), and anticipate things that might go wrong to the best of your ability.
The following repair frequency can be used as a guide:
Roof replacement:
- Composition shingles: 12-20 years
- Asphalt shingles: 15-30 years
- Wood shingles: 20-25 years
- Rubber roofs: 30-50 years
- Metal roofs: 50-75 years
Home exterior repainting:
- Wood siding: three to seven years (depending on the climate), four years if stained.
- Aluminum siding: five years
- Stucco: five to six years
- New siding materials (such as fiber cement): 10-15 years
- Brick: 15-20 years
Water heater replacement:
- Traditional tank water heater: eight-12 years
- Tankless water heater: 20-25 years
Have more questions about rental property maintenance? Or maybe you’d prefer to hand off the task to someone else? Real Property Management Prestige has your answer. Contact us online or call at 281-984-7463.