Eric Wetherington here with New Heights Property Management. I want to cover another question that a lot of folks come to us with and that's how much money should I budget for maintenance and for improvements on my rental property. That is a great question because obviously they can be an unknown. There are several factors that go into answering that question but I just want to kind of give you a rule of thumb to follow.
Generally speaking when we talk about general improvements and general upkeep on your home, you need to figure to spend about 1% per year of the total value of your home. If you have a $200,000 house, generally speaking you’re going to invest about $2,000 a year or need at least set aside $2,000 a year for maintenance and upkeep of that home.
That would include things like your roof replacement - Which should be typically every 20 to 25 years. It would include your HVAC replacement - Which could be six or seven thousand dollars every 10 or 15 years. It would include things like water heater replacement - Which can be $1,500 over the course of about 20 years. You wouldn't necessarily be spending $2,000 every single year, but if you were setting that $2,000 aside every year then when it came came time to replace the roof you would have the money to do that. When it came time to replace the HVAC system, you would have time to do that.
So remember the rule of 1%. Take 1% of the value of your home, set that money aside for those major repairs and then you'll be in good shape. Now what about the general things that happen when a tenant's living in your property? Typically speaking you can figure about half of one month's rent is about what you should need to figure for the little things that come up. Maybe it's re-keying the property. Maybe it's the garbage disposer breaks. Maybe the ice machine acts up and you need to send somebody out to to fix that. If you're renting your property for $1,200 a month then maybe about $600 a year is a good number to think about for those kind of minor repairs that might come up.
And remember its always a good idea to use a professional repairman to make those repairs on your rental property. Its one thing if you want to make repairs in a property that you live in, but when you’re talking about making repairs to a property that someone else is living in - You don't want to be liable if something goes wrong with that repair.
So remember 1% of the total value of your home is a good amount to set aside for those capital improvements, or those major Improvement projects and then about half of one month's rent every year you can plan on just the small things that come up. I hope that information has been helpful to you. If you have any other questions or if there's anything else we can do for you, please reach out to us here at New Heights Property Management. We’d be happy to help you in any way that we can.