Creating a realistic maintenance budget for your rental property can make or break your rental business. When deciding how much to commit, balance quality and cost. Your rental should be safe and comfortable for your residents, but also affordable for you to maintain.
Read along for guidelines to help determine your rental property maintenance costs and expert tips for keeping your maintenance expenses low.
Budgeting guidelines for your rental maintenance costs
There’s no denying that conducting regular maintenance is a critical part of your rental business. Without proper upkeep, your property will quickly fall into disrepair, leading to costly repairs and driving away tenants.
But how much money should you set aside for maintenance expenses? The truth is there are no hard-and-fast rules for figuring out the optimal amount. However, there are several guidelines you can use to estimate your expected costs.
Rules of thumb for rental maintenance budgeting
In addition to the above formulas, there are several others that property managers use to account for maintenance costs:
The Rental Property Age Rule
According to SingleKey’s resident landlord, MacKenzie Wilson, a rental property’s age heavily influences its maintenance requirements. He recommends allocating a percentage of your monthly rent fee as follows to your maintenance budget:
- 2% of your monthly rent for a brand new property (under five years)
- 4-5% of your monthly rent for a 5- to 10-year-old property
- 8% of your monthly rent for older properties (over ten years)
While these guidelines are handy, remember they’re only rough estimates and should be used as a starting point.
Mac's Pro Tip
A realistic maintenance budget should reflect your rental’s needs. That means you’ll need to understand your property inside and out, from its age, condition, and the materials used in its construction. The best way to accomplish this is by doing routine inspections.
Budgeting for larger rental maintenance expenses
Do you live in an area that experiences bitterly cold winters or scorching summers? If so, you’ll need to factor into your budget maintenance costs that come with preparing your rental for drastic swings in temperature and weather conditions.
Also account for bigger, one-time maintenance costs that could dip into your rental reserve fund. Start saving in advance by using this chart for some of these bigger ticket maintenance items.
Item
Average cost
Average lifespan (years)
How to keep rental property maintenance costs down
Here are some tips for keeping your rental in great shape without hurting your wallet.
Know when to DIY and when to hire a professional
Make an honest assessment of your skills, knowledge, and comfort level concerning property maintenance. What tasks can you perform well? And, just as critical, can you get the work done in a reasonable time frame without spending a small fortune?
In some cases, letting professional technicians handle things is much more financially savvy. Even if you have plenty of free time to do repairs, you risk causing significant damage if you lack the proper expertise.
Learn more about how to decide whether to DIY or hire a pro for any repair work.
Plan ahead for seasonal maintenance expenses
While some maintenance tasks are predictable and performed frequently, others only need attention once or twice yearly. A notable example is landscaping.
Given the irregularity of seasonal tasks, budgeting is trickier. Start planning early for the upcoming work to avoid getting caught off guard financially. Increase your budget as necessary to accommodate the extra outlays and start saving up the required funds.
Conduct regular inspections to catch issues early
Minor damage, such as worn-out electrical wiring or a malfunctioning appliance, can lead to costly repairs if left unattended. If the problem grows severe enough, fixing your property can take months, which may lead to lost rent if it’s unsuitable for occupancy.
Avoid maintenance-related financial disasters by detecting issues early through routine rental inspections. The sooner you can spot trouble, the sooner you can act to fix it.
Take advantage of government rebates and tax breaks
Governments at all levels (local, state, and federal) may offer various rebates and tax breaks related to your industry. If available, consider applying for them to reap some extra savings on your property’s repairs and maintenance.
The most notable examples of financial relief are those that encourage the use of eco-friendly building materials and items like appliances.
For example, in Canada, you can apply for the Canada Greener Homes Loan, which provides grants and interest-free loans to homeowners to make their spaces more energy efficient. Similarly, in the U.S., you can access home efficiency rebates and home electrification and appliance rebates, which are available if you retrofit your rental with energy-saving items.
Our final thoughts
Creating a budget is essential to avoid overspending or underspending on your rental’s maintenance. While estimating your expenses at first can be challenging, you’ll get a better feel for how much to spend with time and experience.
Choose a budgeting method that’s realistic for your property type based on the guidelines discussed in this article. Keep your maintenance costs low by outsourcing the work to professionals as needed and sticking with durable materials. And, as always, plan ahead of time for large-scale maintenance projects so that you have sufficient cash on hand to pay for them.
While guidelines for calculating maintenance costs are helpful, inspecting your property is the most accurate way to determine your budget. Check out our guide for helpful tips on conducting an effective rental inspection.
