Can you afford to replace an entire roof or install a new hot water system? If the answer is no, you really need to budget better. From regular maintenance to emergencies, make sure you’re ready for the unexpected and save for a rainy day. You need to be proactive and conduct regular inspections to identify imminent repairs before they become a major cost.
As the property owner, your responsibility includes replacing items subject to natural wear and tear, outdated locks, bolts and furnishings. While if the tenants cause any damage to your property due to negligence or improper use, you can ask them to pay for the repairs. It’s also crucial to respect and respond to repair requests from tenants promptly.
BUDGET FOR THESE MAINTENANCE EXPENSES
- Plumbing leaks
- Garden, yard or outdoor area maintenance
- General cleaning and chemical costs for swimming pool
- Light bulbs and batteries on smoke detectors
- Pest control
- Leaky roof
- Faulty hotwater systems
- Appliance breakdowns
The good news is that you can claim a tax deduction on many of these maintenance issues, which can help reduce your expenses in the future.
ALLOCATING YOUR MAINTENANCE BUDGET
Here are a number of ways you can allocate a maintenance budget;
- The 50% rule suggests that the total operating and maintenance expenses make up to 50% of the income your rental property generates. For example, a monthly rent of $2,000 may incur about $1000 as maintenance costs.
- The 1% rule considers the annual property value. It suggests that total operating costs could take up to around 1% of the property value per year. For instance, if the value of your property is $500,000, then your annual maintenance cost may be around $5,000.
- 5 X rule fuses monthly rental income with annual maintenance costs. Multiply the monthly rent by 1.5 to find the annual maintenance expenses. For example, a monthly rent of $2,000 will present an annual maintenance cost of $3,000.
Would you like to know more about Budgeting? Call our friendly team at The Rental Managers on 07 4755 1800 and we’d be happy to answer all your questions.