Factoring RM Costs

[Bajic]

Hello,



I am currently calculating my financial analysis for a particular property in hamilton. I was wondering from you seasoned investors out there, how do you calculate your repair and maintenance in your financial analysis?



Is it a particular percentage of the gross rents or do you compare the repairs that the previous owner made the previous years? Anyone out there that might be able to give me some insights?



Thank you!



Bajic

 

[Sherilynn]

It really depends on the type, age, and size of the property. A five year old 1-bedroom condo will have a much smaller budget than a 30-year old suited house.



For my 40-year old suited houses I budget $4000/year. My actual spending in 2011 was $5k per suited house because we had several repairs like countertop and backsplash replacements. If you had 10-year old suites, you likely wouldn't be replacing things like backsplashes.



Some people use a percentage of rent, but the problem there is that my 40-year old suites rent for the same amount as a 10-year old suite, so one must adjust accordingly. (My budget would be 15% of gross rent, and you wouldn't need that for a newer property.)