Budgeting for rental property maintenance is an important part of owning and successfully operating a rental property. When we talk to property owners about how to do this, we always highlight the several factors that can go into setting and sticking to a budget.
It’s also important to understand what the tenants are responsible for and what you need to pay for. Even though the tenants are living in the property and using it day in and day out, it’s ultimately your investment. Tenants should pay for anything that is damaged due to their neglect, abuse, or misuse. They should be held responsible for accidental damage that they cause.
However, when it comes to keeping the property in habitable and safe condition, it’s up to the landlord. You need to have a budget in place to manage small repairs and larger projects.
Phoenix Property Management: Normal Wear and Tear vs. Damage
Normal wear and tear occurs when items age or deteriorate. This will happen to paint and carpet in a home no matter who is living there. Landlords are responsible for general wear and tear items; you’ll have to pay to get the property ready for a new tenant, and that will usually include things like painting and carpet cleaning. You cannot charge a tenant’s security deposit for those tiny holes in the walls from where pictures are hung. You cannot charge for scuff marks on the floors and the walls from furniture.
Damage is anything that’s a result of negligence, abuse, or carelessness. Something like a broken dishwasher door could be accidental, but it’s still damage. These are things that tenants are required to pay for, and the cost is deducted from the security deposit at the end of the lease term.
When it comes to budgeting, you might want to put aside an average of 10 percent of your monthly rent for maintenance needs. That 10 percent that you’re saving can be used to pay for broken appliances, to patch a roof, or to service your HVAC system every year.
Little things will randomly come up. Ice machines in the freezer will malfunction or garbage disposals will need to be reset. So, if your rent is $1,500 a month, maybe set aside $150 a month for the minor repairs that might come up with your tenants in place. If you don’t spend any money on maintenance in a given month, keep it saved so you can manage larger repairs in the future.
Phoenix Property Management: Lifespans and Lifecycles
Here’s a useful chart that shows how long you can expect things to last, and what it looks like when they’re damaged or simply the outcome of normal deterioration.
|Material||Average Useful Life||Normal Wear and Tear||Damages|
|Carpet||5 years||Gently worn without holes/stains||Pet stains, holes|
|Tile Floor||25 years||Dirty grout||Broken or chipped|
|Windows||20 years||Lightly scratched glass||Broken glass, hardware|
|Countertops||20+years||Scratches and watermarks||Chipped, burnt, stains|
|Paint||3 years||Faded, minor scuffing||Markers, re-paints|
|Refrigerator||10 years||Worn gaskets on doors||Broken shelf, dented|
|Air Conditioner||10 years||Dirty air filters||Damaged by Neglect|
Routine inspections and careful documentation will help you plan. Preventative inspections and service calls will also keep you on track and informed about when something will need to be replaced.
Well-Maintained Properties Cash Flow Better
Another reason that budgeting for maintenance is so important is that it plays into your cash flow. When there are deferred maintenance expenses and deterioration between every tenant turnover, you’re going to spend more than you need to, and lose money on your rental home. With a preventative maintenance plan and a consistent budget, you’ll be able to forecast what you can earn outside of unexpected maintenance and repair costs. Your property will also be more attractive and functional, making it more appealing to prospective tenants. The rental value will increase.
We know that maintenance can be an expense that landlords don’t love to face. We can help you budget and keep your repairs cost-effective. Contact us at Service Star Realty.
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