3 Ways to Estimate Rental Property Maintenance Costs and Budget Smartly

Whether you are a professional property manager or you just own a rental property or two, there is a specific set of responsibilities that you should always be on top of to be able to sustain the business and make it a success. Rental property management is often perceived as a business with much profit, and many individuals expect to take over all the income easily and fast without using any cent on investing it back into the business. Most property managers are well aware that this is not how it works, and part of the profit must be invested back in the property, including not only taxes and insurance but also the rental property maintenance plan. That’s right, in many cases, people don’t want to spend money on maintenance and try to do it themselves or hire unprofessional crews for cheaper prices. This, however, has its own consequences, as what you put in is what you get out of it. And when it comes to rental property maintenance, you need three things—a reliable crew, an effective maintenance plan, and a carefully planned maintenance budget. 

Why is rental maintenance important?

Good maintenance is one of the most crucial things for rental properties. Managing rental homes is not only about finding tenants and collecting the rent regularly, but it entails a list of success factors without which the business cannot be sustained. Having your rental properties maintained regularly will, first of all, ensure they are clean and presentable for sparking interest in the market. When it comes to rental properties, finding tenants is not the most important goal—it is finding the right tenants for the property that you should aim for to achieve real success. Poorly maintained homes will only attract tenants who will continue keeping them in bad shape, but a well-maintained one will attract the ones who are looking for cleanliness and are willing to provide that as well.  

Finally, high-quality maintenance is a long-term investment you should be willing to make if you want to avoid additional expenses coming up as a result of ignoring the small issues and giving temporary and unprofessional solutions. There are a number of minor problems coming up over time in any house, and with rental properties, the rate is higher. Tenants are changing and so are their living habits and how they maintain the house over the course of living there. Thus, in order to avoid low vacancy rates and potential large-scale expenses, it is crucial to develop an effective maintenance plan and have professional rental property maintenance implemented routinely. The most important thing is choosing the right time to go for professional maintenance before it’s too late and there are major repairs necessary.

However, many individuals usually decide to cut all maintenance expenses and avoid going for professional rental property maintenance. It is often the uncertainty of maintenance costs required that intimidates them, which is why it is extremely important for anyone dealing with rental properties to know the basic ways to estimate rental maintenance costs themselves. In fact, there is more than one way of estimating this, and they are quite easy and accessible for everyone to do. Here are the simplest and most common ways how you can estimate rental property maintenance costs yourself before hiring professional maintenance services. 

How to estimate rental property maintenance costs

1. 1% Formula

The one percent formula is one of the easiest and most common ways to estimate rental maintenance costs without taking too much time to focus on external factors and do complicated cross-calculations. According to this rule, you should use 1% of your overall property value and invest it back into maintaining it. In other words, the annual maintenance of your property will cost you around 1% of the entire house value. For example, if you manage a rental property with a value of $500,000, you should be ready to invest around $5000 back into its maintenance. This formula is very simple and easy to work with. 

2. 50% Formula

Another way to estimate rental maintenance costs for your property is the 50% rule, which is what many people go for. This method entails not only the maintenance of your property but also other expenses included. According to the rule, you should invest 50% of your rental income each month back into the property and use it for rental maintenance costs, repairs, taxes and insurance, and other necessary costs related to the property. This is also a smart way to budget and covers a wider range of expenses, which is why some people prefer to estimate using this formula instead of the others. 

3. Square Footage Formula

The third method of estimating rental property maintenance costs is the square footage formula. What you need to do here is use $1 per square foot for all maintenance activities throughout the year. For example, if your property is 5000 square-foot, then you will need to set aside around $5000 annually for maintenance expenses. This formula is closely related to the size of the property instead of its actual value, however, many people find this method the most convenient one for their needs. 

These three formulas are the most common ways people estimate their property maintenance costs before hiring professional services. However, while there is no right or wrong way among the three, there are a couple of factors that should also be considered when doing the estimation. 

First of all, you should also consider the exact type of property you’re doing the estimation for. Maintenance costs are usually higher for single-family properties than for homes in multi-family houses, which is why you should take this into consideration as well. 

Location is another factor worth considering, as the property might be located in a flood zone or an area with a harsh climate, which usually requires more maintenance than a regular house. 

Other factors worth considering when estimating your budget are how old the house is and what condition it is in. Older houses usually require more maintenance and major repairs that will cost more. If the house is not in its best condition, you should consider additional repairs and remodeling, inspections, and other upgrades. This is why whichever formula you choose to go with, it is important to consider these factors as well to make your calculations more accurate and realistic. 

What’s next? 

As simple as they are, these calculations will give you approximate estimates, however, it is important to consult with professionals and narrow it down to more specific numbers. Rental property maintenance is an investment you should make to ensure the property is in its best shape and helps your business grow instead of damaging it. Thus, finding high-quality maintenance services should be your next priority. Whether you need routine maintenance or other repairs, finding professionals who can inspect your property and address all issues is essential. Partnering with a reliable subcontractor that does it all for you will be of the utmost importance here, as you can make all your custom requests, share your concerns and be confident you will receive the most beneficial solutions for your needs. Finding a partner company will also ensure you have a clear understanding of all the work being done and have an effective maintenance plan for your rental property developed by a team of qualified and experienced professionals. 

Thus, one of the things you should look for in a property maintenance company is appropriate licensing and qualifications in the industry, as this will ensure they are aware of all laws and regulations and deliver safe services. Nationwide coverage is another thing that’s important in a company if you want to find quick and accessible services. Finally, make sure your subcontractor can offer fast and clear communication, be in touch regularly and be responsive to all your requests, prioritizing accountability and delivering complete services. If you have found these qualities in a partner, you can just trust the process and rest easy knowing everything is being taken care of in the best possible manner. 

What are Pros and Cons of Outsourcing Property Maintenance Services?

One of the most important aspects of effective property management is finding the right moment to outsource the maintenance tasks to a professional subcontractor. Maintenance of properties can become very time consuming, especially when one owns or manages a number of properties that need maintenance at the same time. Outsourcing property maintenance services has a number of advantages, which is why more real estate brokers and property management companies are choosing this option.

Outsourcing property maintenance simplifies the working schedule, as the subcontractor helps to set deadlines and see updates for the given tasks on a regular basis. As a result, you are always aware whether the work plan is going accordingly. Regardless of the size and complexity of the project, you need to find a reliable subcontractor for your maintenance work.

Main Pros of Outsourcing Property Maintenance

People operating in the real estate management market face numerous problems. Subsequently, this can lead to overall workload increase. In order to come out with better results, it is important to understand the benefits of outsourcing some of the services, such as property maintenance.

1. It is cost-effective and allows to focus on the important

First of all, outsourcing property maintenance is highly cost-effective and will help you concentrate on income generating activities. Most importantly, you won’t need to make additional capital expenditures for buying additional equipment. This will contribute to the ultimate goal of reducing maintenance costs.

It is important to note that applying to a property maintenance company on time and avoiding the “run until it fails” method will also help you to reduce potential costs in future. Therefore, outsourcing this service will help you focus mostly on important tasks and be sure that the property is maintained in a good condition.

2. Outsourcing frees up a lot of time for real estate brokers

Real estate broker’s day-to-day responsibilities include a number of tasks that are critical for generating leads, such as contacting different people, writing emails, researching the market, etc. Thinking about additional tasks such as property maintenance can take a long time and block the sales funnel. Therefore, that will be a good option to find a safe partner for outsourcing.

In short, outsourcing property maintenance means that you can free your time and concentrate on work related tasks. To avoid further complications it is also important to do proper research before hiring a subcontractor.

3. Hiring a contractor is a more flexible way

One of the major advantages of contracting a professional provider is that you will get full flexibility and won’t need to think about small details along the way. A good property maintenance crew will take care of your property and make sure that it is cleaned, well-functioning and maintained everyday. 

When you recruit an in-house crew, you must adhere to plenty of rules and regulations that don’t exist when you hire a contractor. Additionally, there are local regulations that you need to follow once maintaining the property. If you hire subcontractors that have a presence in your community, they will be up-to-date of all necessary laws.

4. It simplifies the recruitment process

Your subcontractor can provide enough flexibility to deliver the proper staffing level and required skillset promptly, all together at a lower cost and time investment. It allows hiring specialized property maintenance services as needed rather than investing in creating in-house competencies.

Also, by outsourcing property maintenance services, you can fully manage what is being done and be sure to pay for negotiated results. It allows you to develop and execute more effective maintenance services that you otherwise wouldn’t be able to handle on your own.

Main Cons of Outsourcing Property Maintenance

There are a variety of responsibilities associated with property maintenance services  and several cons of outsourcing these services. Besides knowing all the benefits of outsourcing, you must also note all potential problems in order to make the right decision.

1. You need to pay special attention to the quality

As for cons of outsourced maintenance services, the first one goes for the quality. Some contractors are more interested in gaining more profit rather than focusing on the final result, so their strategy is to do as many jobs as they can. That means the work you send out may arrive quickly, but it will be of worse quality than what you anticipated from your products or services.

Therefore, it is important to search for a reliable partner. Generic online searches may not come up with the results you want, or they may take longer to find an exact match for the type of service provider you need. To solve this problem define location-based search to narrow down the selection range. This process can be more easy by using specific platforms such as: Yelp, Thomasnet, and  Merchant Circle.

2. Failing to deliver a service

Sometimes it’s risky to trust a third party service provider. The main challenge here is lack of control over the contractor, but if managed properly this can turn out to be an advantage.

First tip to find a trusty service provider is looking at the feedback of previous clients. Ask colleagues who have experience of outsourced maintenance services. Check online reviews, ratings, take into consideration the reputation of the contractor and shortlist them for further assessment.

3. It becomes hard to find a suitable candidate

There is a risk of finding a trusted third party service provider. Search and more search is essential as there might be contractors with fake reputation. Your maintenance outsourcing partner should ideally be certified and have a staff with relevant experience. It does matter also if the equipment is up to date and can fulfill required tasks.

Finding a great contractor is time and work well spent. It can be challenging to find the right fit. But keep these lists in mind to get you started in the right way. When you employ a traditional third-party service provider for property maintenance, you’ll save time for your business growth as with in-house crew, you may have a backlog of work orders to complete, delaying your ability to respond to customer requests. 

The Ultimate Guide for Single Family Property Maintenance

If you manage a single-family property, you understand how important it is to be on top of any possible problems. It will have a significant impact on not only your property but also your investment, in case a pipe bursts or a house needs new roofing. Therefore, professional property maintenance is essential for sustaining the value and revenue of the property, regardless if you own a single-family house, condo, or even a big multi-family residence.

Paying enough attention to property maintenance will be easier and cheaper compared to paying for big repairs. Here is the ultimate guide for starting a single-family property maintenance process. However, it is also important to know where to seek a professional subcontractor to manage your project.

What is Property Maintenance?

The fundamental question before starting the process is understanding what property maintenance is. The total care and upkeep of a property or installation, any preventative or reactive maintenance effort taken to keep a residence operating in its perfect working order, is known as property maintenance.

Property upkeep entails a diverse set of tasks and requests. Taking care of tenant demands for upkeep, servicing and repairing HVAC systems, maintaining landscaping, providing pest control, and even cleaning and painting common areas are just a few examples. In addition, safety inspections are also an important part of basic property maintenance, as faulty equipment (such as alarm systems) or hazardous circumstances can be a huge liability.

Why is Property Preservation Crucial?

First of all, home maintenance is about how a home looks and how it works. Second, it provides significant long-term benefits, aside from the obvious benefit of taking care of the property you own. You can be more certain in the future if you specify the items on your list today. They can also assist in money-saving.

Each preventative maintenance work is intended to maintain the house’s full functionality and help you spot any problems early on. Plumbing difficulties, roof damage, and fires can all be avoided with a little time and work now and again. As a result, regular upkeep and maintenance, just like the car, is necessary to retain a high market value.

What Budget Should You Set Aside For Home Maintenance?

As the owner of the property, you need to understand the budget for the whole maintenance process. There are two allocation methods for home maintenance.

The first option is the 1% rule, according to that maintenance should be funded at least 1% of the home’s sales price. At the same time annual maintenance costs can vary depending on the type of the property: when it was built, the climate in which it is situated, the materials and finishes used, etc.

The second option is putting aside $1 per square foot of the house for annual repairs. This method is known as the square-footage rule. However, it seems a bit contradictory, as even if the residences are similar sized, maintenance expenses for a house with high-end finishes and appliances would be more than for a house with lower-end finishes and appliances.

Keep a close watch on your residence condition for planning the property maintenance budget. If you’re unsure what to do or what condition your home is in, or just do not have time to manage this, it’s never a bad idea to seek professional advice.

What does Property Maintenance Include?

There is a to-do list for both inside and outside of the house for single-family property maintenance. As property maintenance activities vary depending on the weather, we have compiled a list of seasonal actions for your single-family house. It’s vital to remember that each season has its own set of maintenance possibilities and hidden issues.

Fall Maintenance

Fall is a pivotal season for your properties. There’s a lot to do to prepare them for the colder months ahead.

Indoors

  • Replace batteries of smoke and carbon monoxide detectors. Every floor of your home, including the basement, should have a smoke radar.
  • Trim branches hanging over the roof as it can scratch the shingles protective covering on the outside because of the storm.
  • Replace single-pane windows with storm windows as it will save you up to $350 per year on energy expenses, according to EnergyStar.gov.

Outdoors

  • First of all, inspect your forced-air heating system with a professional, then plan an inspection at the end of the summer or beginning of fall, before the start of the heating season
  • Examine the fireplace for any damage or risks, after that clean the flies. A fireplace cleaning log can help avoid chimney fires by removing debris that has accumulated along the chimney walls.

Winter Maintenance 

Winter weather’s effects on your estate can be severe. For instance, below-freezing weather can result in a variety of issues, such as roof damage and frozen pipes.

Indoors

  • Check the sump-pumps. Sump pumps remove water from your basement, crawlspaces, and around your foundation and carry it away from your house. It’s critical to inspect your sump pump twice a year.
  • Drain and winterize exterior plumbing and prevent pipes from freezing and bursting.

Outdoors

  • Own a portable generator, if you do not have one, now is a good time to get it. To clarify, generators can keep the house warm until the power provider is able to restore power.
  • Your front door should be weather-stripped. Weather stripping is a wonderful way to start to reduce heat loss around your door and save money on your energy bill.

Spring Maintenance 

Once the trees have started to blossom, it is important to get your house ready for spring. Therefore, here are general upkeep ideas in addition to your typical spring cleaning.

Indoors

  • Change the air filter in your air conditioner. Filter dirt and debris can restrict air passage, putting more strain on your cooling system. 
  • Polish wood furniture and dust light fixtures as furniture refinishing is an excellent technique to protect the hardwood surfaces in home from scratches while also shining them.

Outdoors

  • Remove the lint from the dryer vent with a vacuum, since it’s the best way to ensure that the air is clean inside the house
  • Cultivate your yard using fertilizer to assure healthy soil in order to plant nutritious crops

Summer Maintenance 

In order to get the hard labor out of the way at the beginning of the season, use our simple summer home maintenance advice. Even if it’s already hot outside don’t worry, the majority of these jobs can be completed in a building.

Indoors

  • Oil garage chain and door opener, since the hinges are where you will need to oil the door because they are the reason for a squeaky or creaky door. You might be able to lubricate a squeaky hinge without having to take anything apart to fix it. The hinge pin may need to be removed on occasion.
  • Make sure that you have cleaned the kitchen exhaust fan filter. Grease and filth can easily block the fan filters, resulting in foul odors and fires.

Outdoors

  • Trees and shrubs should be pruned. ​​Pruning shrubs and trees promotes the formation of flowers, fruit, and new foliage by removing dead or diseased stems and branches and encouraging the growth of flowers, fruit, and new foliage.
  • Prevent and reduce bug breeding grounds; start by locating potential water retention areas and eliminating them.

Why Should You Hire a Property Maintenance Company?

A small investment in maintenance and care can save money on future major repair costs. The main objective of property maintenance is to keep or increase the value of your real estate. As long as you choose to invest in a property maintenance company, you will avoid the unaccepted maintenance concerns such as sizable repairs, moreover, you will have a chance to maintain property value and improve the safety of your estate.

To conclude, experience counts when it comes to looking for property maintenance trusted services. Hence, understanding the service you require and locating a qualified contractor to assist you in completing your project are two of the most critical aspects.