This is a common question I receive. I am often asked this question by new clients that have just become landlords, those that are thinking about becoming a landlord, or real estate agents that want to give their clients some good information. They want a number that they can plug into their calculations so they make sure they are prepared for when the day comes for the next repair bill.
I always suggest that landlords budget between $50 - $100 per month for repairs and maintenance for a single family residence. If the house is older or has a pool, the costs may be much more than this. If the house is brand new and has no pool, the monthly cost may be closer to zero in the first couple years. However, sometimes even new houses may have repair items that arise that are not covered by the builder or other warranties. But it all depends on the age, condition and amenities of the house as to what to plug in for any specific property.
I just ran the numbers for the portfolio of properties that we manage to compute the average monthly cost for all the repairs and maintenance. It turns out that when we add all the repair and maintenance costs for all the properties and dived by the number of properties we manage, we come up with $77/month. This is consistent with the advice I have been giving for years.
In doing the research to find our average monthly repair and maintenance costs, I noticed that the three top repair and maintenance categories, in order from most money spent to least, was; 1. Handyman repairs, 2. Plumbing repairs, 3. Heating, Ventilation and Air Conditioning (HVAC) repairs. So what’s the take away? Well, if your client is planning to self-manage their rental property, these are the first three vendors I would recommend building a solid relationship with or doing some research to find the best one to fit their needs. We have consistently found really solid plumbing and HVAC companies to work with, but the handyman is probably the most challenging person to find. Over the years we have found some great handymen and work with our favorites to this day. But we have worked with many in the past that were “here today, gone tomorrow,” so beware.
“But what about home warranties?,” you ask. Many landlords believe that if they have a home warranty for their rental property, they can brush of their hands and be done worrying about maintenance, other than the service charge for each time a vendor is called out. Although home warranties can greatly offset maintenance and repair costs at times, there are situations when the home warranty does not cover the particular repair. So the landlord should avoid the false sense of security that they may get from having a home warranty. Also, when shopping for a home warranty, landlords should be sure they fully understand what is and isn’t covered. We had a situation in the past where the main reason the landlord purchased a home warranty was to cover the dated appliances that he thought could fail at any moment. Sure enough, several months after buying the home warranty policy, the tenant called to say the refrigerator stopped working. We called it into the landlord’s home warranty company, only to find out that landlord didn’t buy the added coverage that would have covered the appliances. He assumed they were covered in the basic policy, but they were not. Needless to say, that landlord was very upset when he realized he didn’t have the coverage he thought he did.
Hopefully, this insight will help you and your clients plan for impending repair and maintenance costs. The thing I know for sure, it’s not a matter of if, but when, the next repair will pop up.