Maintenance budgets for single family / suited properties!

[LAndersen]

Just looking for some thoughts on how much to budget for maintenance for suited properties / single family properties. I read recently that a person should budget 3 - 5 % of purchase price on an annual basis towards maintenance. Some of this would be used to do the more day to day repairs and some set aside as a long term capital reserve. This makes sense but seems a bit excessive. What does everyone else budget?

 

[flyingsquirrel]

Disclaimer: I am no expert. This is just my humble opinion.

I think it depends on the age and maintaince status of the home.

If it is new, budget 3%, if it is old, you may need to budget more than 5%.

However, I would put most of the extra money into mortgage payment, and take money out as HELOC when I need them. Hence all your money is working.

 

[HeatherBrandt]

we use 8 % for our older yet renovated suited properties.

 

[Thomas Beyer]

It depends on age and condition of property !



$600-$700 for a 2BR 800 sq ft condo in good condition PER YEAR is a good ball park for R&M .. PLUS capital upgrades which is called a "reserve fund" in most strata/condo boards, say $50-$70/month.



or for a 1500 sq ft + 800 sq ft basement single family house:



Using a 20 year average:

one new roof every 20 years: $20,000

2 hot water tanks: $1400

3 carpets or hardwood floors: $9000

4 paint jobs: $6000

landscaping: $2000

new bathrooms: $6000

new kitchen: $5000

plus plus plus ...



.. say $40,000 to $50,000 in 20 to 25 years .. easy .. or $2000 to $2500/year for a house .. or about $200/month on average!! Some years 0 .. and then, boom: $9000 plus 3 months vacancy !



Now, assuming house is in decent condition, and the roof is fine for 10+ years, as is the kitchen or the bathrooms .. that'll leave paint, carpets, fences, landscaping, grass, doorhandles, hot water tank .. an "average" is hard to guess as you may have 2 years with 0 R&M and then you may have to re-carpet the whole house, paint it, fix 2 showers and 2 toilets and fix the hot water tank for $8000 all in ..



Budget your "cash-flow" accordingly i.e. keep a healthy reserve !!! Best would be an appropriately sized line-of-credit that costs you nothing until used !!



Some people have drowned in rivers one foot deep on average !

 

[bizaro86]

[quote user=LAndersen] I read recently that a person should budget 3 - 5 % of purchase price on an annual basis towards maintenance.


That seems excessive to me. If you bought a property that fit Rein's 10% rule, ie, rent was 10% of purchase price, and you estimated 3-5% of the purchase price for maintenance, you'd be budgeting 30-50% of your annual rent for maintenance.



So, a 200k property would rent for 20k a year and require 6-10k per year of maintenance, which seems quite high to me.



A better plan to me would be to figure out what the two most expensive things that could happen. (IE new roof + new kitchen, or whatever) and keep a reserve fund high enough to cover those expenses if they happen in one year. An average budget doesn't help you if you can't pay for an emergency when it comes up.



Regards,



Michael