Maintenance Allowances

[asy]

From: Asy .


Hi all,

Here's a question for you about maintenance of a property.

Assuming there are no major works required, how much do you factor in as the 'maintenance allowance' of a property?

I have heard people say that it should be a % of the property value, and others say that they allow a fixed $ sum per property per year.

Obviously some years this will remain unused, and some years it will blow out, with repair or replacement of appliances.

I was just wondering if anyone has a formula, or what peoples thoughts were on the matter.

asy


There are no problems, only solutions which have not yet been discovered.

 

[Michael Croft]

Reply: 1
From: Michael Croft


Hi Asy,

I don't have a strict formula as such but it goes like this. A reno about every 7 years at $10k plus $5k for other during that period. This equates to about $2,200 per annum of which +/-$1,500 is of a sinking fund nature.

My properties are not new so this may be a bit high but I will guarantee that once a year a stove, hws, or other significant item per property will go south on me. The 'other' covers the tree roots in drains, the light fitting that shorts out, the leaking chimney flashing, the blown up letter box (bloody kids!)- all of which have happened to various properties in the last two weeks!

The 'sinking fund' only exists on paper too, the money is hard at work elsewhere.

Michael Croft
"The best parachute folders are those who jump themselves."

 

[Tom]

Reply: 2
From: Tom Moschitz


Again, no strict formula and my properties (3) are also reasonably old, all pre 1985, although all were in reasonable condition when I purchased them. But with 3 years of real data I can tell you that the average over the three properties over three years is $625 per property per year and that's including two replacement water heaters.

Regards,
Tom M

 

[Sim]

Reply: 2.1
From: Sim' Hampel


Tom, do you think from your experiences and data that those yearly figures can be realistically related to something else like purchase price or rental ? Such as "approx 10% of rental income".

Or do you only work on absolute amounts like you mentioned ?

 

[Michael Croft]

Reply: 2.1.1
From: Michael Croft


Doesn't seem to vary that much as a fence on a $500k $600pw property costs the same to fix/replace as a fence on a $200k $250pw property. A blocked drain is the same everywhere and a HWS likewise.

So I suppose percentages are of limited value. They do apply to some items based on quantity/size eg. internal reno items for a 6 square 1 bed flat will be proportionally less than a 22 square 4 bed ensuite (quality of reno being similar).

Michael Croft
"The best parachute folders are those who jump themselves."