Investing in property is a great way to build wealth. Real estate investment provides you with the opportunity to generate stable rental income, and it also preserves your assets’ value over time. However, investing in property isn’t easy and requires a lot of research, preparation, and planning.
In this article, we’ll discuss the average property maintenance costs that landlords face and how to estimate them. By learning about these costs, you’ll be able to make the most informed property investments that are both profitable and sustainable.
Maintenance expenses are necessary for keeping your investment properties in good condition and attracting high-quality tenants who will pay fair market rents. Regular maintenance ensures that your tenants are comfortable, can reduce vacancy periods, and can help you avoid expensive repairs or make-ready costs. Also read https://www.brightbidhomes.com/
There are two types of maintenance expenses that rental property owners must account for: routine and capital expenditures. Routine maintenance includes tasks such as mowing the lawn, cleaning and inspecting appliances like refrigerators, ovens, and washing machines, and repairing plumbing and electrical issues. Capital expenditures, or capex, are larger repairs and upgrades that improve the value of a property. These might include things like installing energy-efficient windows, building an additional dwelling unit (ADU), or renovating kitchens and bathrooms to increase appeal and utility.
Expenses vary by property and can be difficult to predict, but there are some general rules of thumb that can help you estimate your investment property maintenance costs. A good rule of thumb is to save roughly 5% to 10% of your gross monthly rental income into a maintenance contingency fund. This can be in the form of an emergency savings account or a cash reserve.
Other factors that influence average maintenance costs are the age of your property, size and type of the structure, and its location. Older buildings generally require more maintenance than newer ones due to wear and tear, and large homes may have more areas that need to be maintained than smaller homes. A higher tenant turnover rate can also increase maintenance expenses, as frequent move-ins and moves-outs cause more wear and tear.
The best way to estimate rental property maintenance expenses is to use a simple formula. The one percent rule states that you should expect to spend about 1% of your property’s total value on annual maintenance and upkeep. This is a convenient and easy-to-use calculation, but it’s important to remember that this rule can vary depending on the exact nature of your property and its location.
As a new investor, you might be surprised by the many expenses associated with owning and operating rental properties. To get a better idea of what to expect, you can speak with experienced real estate investors or contact a reputable property management company. They’ll be able to provide you with the information and guidance you need to succeed in the rental property business. With proper planning and the right team, you can minimize your maintenance expenses and enjoy the lucrative returns of renting out real estate.
