How much to allow for repairs and maintenance?

[MaxRobbins]

Hi All,

Just curious to know how much or what percentage fellow investors allow for repairs and on going maintenance when budgeting to buy.

I have just exchanged on a 50 year old house on 600sqm in Western Sydney for $500K. I knew going into the purchase that it would obviously need some work, but having just received the building report back there appears to be some area of concern re plumbing and possible rising damp.

I'm sure this is fairly typical of a property this age, and will still move forward as agreed at a favourable price, but just wanting to know what rough measure people use as contingency pre purchase.

2% of purchase price, 5% or more. I know this depends on the house, but the majority of houses in these areas seem to be of fairly similar and age, and seem highly unlikely that I would have found one with no work what so ever. Finding one full stop has been hard enough lol.

Thanks

Max

 

[Aulyna]

The repairs and maintenance cost really depends on the condition of the property...

 

[sydprop]

I normally tend to think around 1% of current value for all outgoings (excluding agent fees) but this might differ at different price points (seems about right for 600k properties). This is normal maintenance not renovating or major repair.

Most building reports on 50 year old original buildings would appear alarming - whether or not anything really needs to be done depends on actual realised issues and the ROI for any upgrade. (That ROI could be soft - e.g. your quality of living for PPOR or hard - e.g. More rent!)

Watch out for initial repairs, they are not considered expenses for tax purposes.

 

[hugh72]

The answer is and it's not very helpful is it depends. You would need to determine what was urgent, necessary or only cosmetic improvements which may increase rent return. Urgent repairs are not optional, leaving other repairs may only mean a greater cost down the track. Other items you could classify as it would be nice to do. A lot of rental properties are unloved and some landlords don't spend any money judging by the standard of some listings when they probably should as it would increase the properties value

 

[vaughan]

... there appears to be some area of concern re plumbing and possible rising damp.

I'm sure this is fairly typical of a property this age...

Not necessarily. Well built (and maintained) houses with good sub-floor ventilation are unlikely to get rising damp. Lateral damp from the wet areas like bathroom or laundry are typical, and if caught early are cheap to fix.

Things like leaky gutters, stormwater pipes that drain onto the ground and lots of concrete paths close around the house cause damp problems.