Planning Ahead For Maintenance And Repair Costs

Planning ahead for​ Maintenance and​ Repair Costs
One of​ the biggest problems for​ many rental property investors can be failing to​ plan for​ maintenance issues in​ their budgets .​
While it​ can certainly be quite tempting to​ see all income over and​ above the mortgage payment as​ profit, this​ can be dangerous when something breaks and​ you​ realize you​ do not have a​ budget to​ cover the cost of​ repairing it .​
The simple fact is​ that regardless of​ how well maintained your​ property might be, things can and​ will break from time to​ time so the best course of​ action​ is​ to​ plan ahead and​ budget for​ it​ so you​ do not struggle later on​ .​
Ideally, the best time to​ begin​ thinking about your​ repair and​ maintenance budget is​ before you​ actually purchase the property .​
When you​ are looking at​ the numbers associated with the potential investment you​ will need to​ make in​ the property, it​ is​ essential that you​ take repairs and​ maintenance into consideration​ .​
Unfortunately, many investors completely forget to​ allocate funds they will need for​ repairs of​ the property and​ instead only take costs associated with taxes, fees and​ mortgages payments into consideration​ .​
First, you​ need to​ consider those repairs that can be foreseen relatively easy if​ you​ are observant .​
for​ example, take into consideration​ the age of​ the roof​ .​
Generally, by studying the condition​ of​ the roof​ you​ can usually determine when you​ will need to​ replace it, more or​ less .​
The same is​ true of​ the home’s main​ systems including the air conditioning system .​
By taking into consideration​ the natural lifespan of​ many of​ these items you​ can typically predict when you​ will need to​ come up with the funds for​ these replacement costs .​
When considering the potential repair and​ maintenance costs you​ may run into as​ you​ shop for​ property, it​ is​ important to​ take several factors into consideration​ .​
Property type should be one of​ the first factors you​ consider because the type of​ the property can affect repair costs later on​ .​
for​ example, if​ you​ purchase a​ brick property you​ certainly will not have to​ worry about painting it​ in​ a​ few years .​
The size of​ the property should also be taken into consideration​ .​
Smaller properties are typically easier and​ less expensive to​ maintain​ than larger properties .​
Larger properties are more expensive to​ maintain​ because it​ simply costs more money for​ repair and​ maintenance issues such as​ replacing the roof, repainting the exterior and​ exterior, etc .​
Surprisingly, the location​ of​ the property can also play a​ role in​ how much you​ need to​ budget for​ repairs as​ well .​
Take into consideration​ the distance of​ the property from your​ location​ .​
if​ the property is​ located more than 30 miles from where you​ are located, you​ are going to​ spend more money traveling to​ the property and​ that can add up quickly .​
Finally, consider how you​ plan to​ manage the property .​
Do you​ plan to​ handle most of​ the maintenance work on​ your​ own or​ will you​ hire help? Hiring outside help can be more expensive overall; however, you​ must also consider the amount of​ time you​ have available for​ making repairs and​ your​ own skill and​ experience level .​
It is​ also important to​ remember that there will typically be some problems which will come up completely unexpected and​ unscheduled .​
you​ will need to​ make sure that you​ budget for​ these items as​ well so that they do not hit you​ too deeply in​ the pocketbook .​
Generally, it​ is​ a​ good idea to​ plan an​ annual budget of​ between 1% and​ 2% of​ the value of​ the property for​ repairs which may come up unexpectedly .​
for​ example, if​ you​ have a​ $100,000 property you​ would need to​ plan to​ spend between $1,000 and​ $1,500 .​
By planning ahead and​ budgeting for​ maintenance and​ repair issues you​ can make sure you​ are prepared when these items inevitably arrive and​ will not be financially surprised .​

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