How to Estimate Repair Costs for Your Atlanta Rental Property
Rental property maintenance is an important part of having a rental property. It is vital that you maintain your property to ensure it is safe for the tenant and to enjoy gains for the value of the property.
Methods for Estimating Repairs
One method to estimate what the yearly maintenance costs will be is to base it on the $1 per square foot method. So, if your property is 1800 square feet then you would want to set aside $1800 per year for maintenance.
Another method is to base yearly maintenance costs for the property using the 1% rule. If the property is valued at $350,000 you would set aside $3500 to cover maintenance costs for that year. As the property increases in value over the years, the maintenance pool of money would grow to account for increases in the cost of repairs. This method may provide more of a cushion for repairs and less of a cash crunch when repairs are needed.
Factors to Consider When Estimating Repairs
The type of property will also factor into your repair budget. If you own a single-family property you will want to set aside more than if you own a condo and do not have to consider exterior maintenance in your budget.
The age of the property could have some effect on your repair budget. An older property generally requires a bigger budget for repairs than a newer property but this can depend on the condition of the property.
Types of Repair Expenses for Your Rental Property
There are two types of expenses, fixed and variable. The fixed maintenance costs can fall under routine maintenance a property needs to remain in good condition, such as, cleaning out gutters, annual service of the HVAC units, blowing off the roof, and seasonal landscaping upkeep.
The variable repairs are more difficult to predict but you can plan for them to some degree. If you have a refrigerator that is 15 years old, you may want to plan on replacing it sometime in the near future. It is important to consider the average life span for appliances, HVAC systems, roof, and plan on replacement in the future.
Importance of Planning for Repairs for Your Rental Property
Planning for repairs will help you set aside some of your rental income to maintain the property and keep it in good condition. One of the biggest issues with delaying routine maintenance is that what was at one time a small repair turns into a much larger more expensive repair in the future. A couple of bad shingles that are not replaced timely can become water intrusion in the attic which leads to wet ceilings, drywall replacement, and a possibility of mold.
Stay on top of maintenance to help keep the tenant happy and also to avoid more costly repairs in the future.
The good news with rental property is that certain qualifying repairs can be written off on your taxes. It is a good idea to consult a tax professional to ensure you are taking advantage of all the tax allowances.
Written By: Melanie Van De Grift
Melanie Van De Grift is the Owner and Broker of Atlanta Property Management Solutions.
With over 20 years of experience in the real estate industry in Atlanta, Melanie has built a reputation for her unparalleled expertise, exceptional customer service, and unwavering commitment to her client's success.
