A recent poll by Buildium found that most landlords mentioned property maintenance as their most significant pain point. And that’s not all — some ranked property maintenance as their third most crucial pain point in a nationwide poll carried out by SmartMove.
Simply put — landlords and rental property owners confirm that routine property maintenance is crucial to maximizing ROI and retaining residents.
Residents are drawn to a rental unit for various reasons, and one of those reasons is the state of the property. This is why every landlord should prioritize keeping their unit(s) in mint condition.
To do this, it’s necessary to identify key exterior maintenance tasks (both routine and larger repairs) and budget properly on a monthly/yearly basis for any expense related to your rental property.
The outside characteristics of your property are subjected to significant wear and tear from the environment and can carry a bigger price tag to repair (more on this later).
From blazing sunny days and tumultuous spring storms to substantial autumn rains and heavy snowfall—your property’s exterior sees it all.
Now let’s get to your budget. First, getting an accurate picture of all the expenses you can expect when owning a rental property is necessary. There are many inevitable costs and include:
Again, these costs will vary depending on the property and its location. Maintenance expenses can account for the most unpredictability when knowing how much to budget due to the scope of work needed and the type of repairs.
So how much should you budget for maintenance? What about exterior maintenance?
Additional Resource: When factoring in projected cash flows and expenses for any property, a pre-built cash-flow calculator is always a helpful tool to get as close as possible to the real numbers. Access our rental property calculator here. >>
A good place to start is 5-10% (or even more) for routine maintenance and the same amount for CapEx (unless you know something needs to be replaced sooner). Provided the renovations on this house were done completely and correctly, a good rule of thumb is between 5-7% for repairs and maintenance monthly.
Keep in mind that even though 5-10% of gross rent is a good number, it depends heavily on the condition of the major systems on your property and, in this case, the exterior. If the HVAC, roof, plumbing supply, drain lines, and foundation are all updated and verified to be in good shape, you’ll come in much closer to 5%.
One thing that also affects this percentage is the price of the home. An $80k home and a $400k home (assuming they are the same size) cost about the same to repair. So with the cheaper home, any repairs and maintenance will represent a much higher % of your gross rent.
To get more specific, what exactly should be included in your exterior home maintenance? Exterior maintenance items to account for can include things like:
On top of the common, ongoing maintenance tasks, landlords need to account for larger big-ticket repairs, known as capital expenditures (ie. CapEx). These items include:
Costs associated with maintenance and repairs are not the same across all rental properties. There is no way to be 100% sure how much money you’ll spend each year from property to property, especially when it comes to maintenance.
Suggested Listening: Major Rental Property Repairs Every Investor Should
When it comes to home maintenance in the United States, the landlord is legally responsible for the exterior and interior home maintenance. Even if there are occupants in a rental property, the landlord is still obligated to regularly do necessary maintenance and repairs to ensure that the property is suitable for habitation.
This obligation is called the “duty of repairs and maintenance.”
I strongly suggest you look into the most recent state laws concerning landlord rights and tenant rights regarding repairs. For example, landlords in the state of New York are responsible for maintaining the building’s electrical, sanitary, plumbing, and ventilation systems.
On the other hand, according to the Alaska Landlord and Tenant Act, landlords have ten days to fix problems and make the rental property livable after receiving a notice of a tenant’s complaint.
When budgeting your rental property, be sure to cover all your bases, everything from common day-to-day tasks to the exterior maintenance of your property. Exterior home maintenance and any capital expenditure can’t be something you ignore; instead, they must be prioritized. From there, it will become a key method for retaining tenants.
So, would you rather save money every month for home maintenance of your rental property or potentially spend thousands of dollars all at once? As you can see, a little budgeting now can save you from spending a fortune in the future.
Property maintenance services keep real estate properties in excellent working order by taking care of tasks on behalf of the property owner. This allows the owner to focus on other aspects of their business. Various activities fall under the umbrella of property maintenance but let’s focus on the exterior.
Before making up your mind about DIY property management, read our guide on “Is DIY Rental Property Management Right for you?” to help you in your decision-making process.
Lucas is a Content Strategist for Evernest. When he isn’t doing research or creating content, you can find Lucas drinking coffee or eating tacos. He is a native of western North Dakota now living in Austin, TX.