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How to Budget for Rental Property Maintenance Expenses | Mentorship Monday 094

4,787 views · Published 9 April 2018 · 4:30 · Indexed 8 November 2026

Channel: DeRosa Group · 2018 · Education

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Hey Youtube,

Welcome back to another episode of "Mentorship Monday" and today's questions makes it's way all the way from Iowa City, Iowa.  The question is "how do you budget for repairs and capital expenditures on your rental property?".  

In this scenario, our viewer is already has 5 separate properties and is looking into buying another single building property with an additional 4-6 units. Looking to step up your game I see. Nice job!

Here's the general rule of thumb.  Avoid using general rules of thumb to calculate cost structures that might apply only to bigger deals.  I see this happen all the time.  Most people apply general rules of thumb from bigger deals onto smaller deals and assume they'll all work out the same way.  This is a big mistake because depending on what type of property you have, will determine how it performs.  

For this particular situation I would calculate around $700-$800 per unit.  Also take a look at what the management cost are to maintain the properties that you already have.  Typically a 4-6 unit single building is going to perform the same way as a portfolio with 4-6 separate homes.  There's not going to be a ton of work to do, where you're going to have a maintenance man on call 24/7.  

One thing I would add, being that this is a "smaller" deal, is to add another line item for unit turnover.  Add in another item for paint, small repairs and maintenance that's going to keep the apartment up to a certain standard.  With bigger deals this expense is usually just lumped in with maintenance cost, but for the smaller deals, I would add this as an extra line item.  Hope this helps!

As always, please email us any real estate questions to [email protected] and we will answer them on an upcoming episode!

Learn more about The DeRosa Group at http://www.DeRosaGroup.com or on BiggerPockets.com - https://www.biggerpockets.com/renewsblog/author/mattfaircloth/
Matt & Liz, founders of DeRosa Group, were recently second-time guests on the BiggerPockets Podcast. 

Check it out:  https://www.biggerpockets.com/renewsblog/bp-podcast-203-finding-deals-funding-contractors-mentors-matt-liz-faircloth/

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