There’s plenty of rental property maintenance myths in Tamarac. In this blog we will talk about one of the commonest one.
Sure, maintenance and repairs are part and parcel of owning rental property, but forewarned is forearmed. Knowing the maintenance cost of your rental property is an indispensable aspect of making your rental property work for you.
Myth #4: Just Estimate Rental Property Maintenance Costs
Trying to estimate how much money you’ll need for maintenance on a rental property? Listed below are a few “Rules” you may want to try out.
- 50% Rule: total operating costs (repairs, maintenance, taxes, insurance) will equal half of your rental property income. So if your property rents for $1,200/mo, you should expect $600 of that to go to keeping the property up and running.
- 1% Rule: maintenance will cost about one percent of the property value per year. So a property valued at $190,000 should cost $1,900 a year to maintain (or $160 a month).
- Square footage rule: Plan on $1 per square foot for yearly maintenance costs. So a 2,200 foot rental should cost roughly $2,200 a year in maintenance costs.
- 5x rule: maintenance costs will average 1.5 times the monthly rental rate. So if your home rents for $1,200, then you should anticipate spending approximately $1,800 a year in repairs.
- Murphy’s Law: anything that can go wrong, will go wrong. So, no matter how much time you spent estimating your cost, the answer will be wrong!
Rental property maintenance cost: Rough guess or proper estimate?
It’s easy to a take a rough guess on how much money you should plan on spending on – anyone can do that. The problem is that there are just too many variables to accurately estimate. So use whatever formula you prefer to predict your cost, but keep in mind these two estimates:
- 75% of yearly rental property maintenance and repair costs will be higher than you’ll expect
- 100% of rental property repair and maintenance expenses will be higher than you’ll want
Rental property management: DIY or Pros?
It’s a rental property maintenance myth to save money getting the guesswork right by yourself. As many landlords have discovered, often a maintenance fee is a small price to pay for peace of mind.
- Firstly, they can offer rates through economies of scale, by leveraging quantities of material and labor costs. Something an indivdual simply cannot compete with.
- Secondly, at Real Property Management Premier we keep up to date with changes in property codes, saving our customers from unforeseen financial penalties.
- Finally, as a Property management company, we know enough about tax deductions to reduce the costs of property repairs.
Tired of trying to find the most cost-effective plan to manage your property?
Our property management fees range between 6 to 15% of monthly rent. It’s a flat fee, in most cases, unless there is a sudden and large unforeseen expenses in monthly maintenance costs. And it comes with total peace of mind, bult-in.
Sometimes it’s just a convenience, but often the cost of hiring a professional property manager like Real Property Management Premier makes the most long-term financial sense as well.
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