For many multifamily properties, maintenance is one of the top three operating expenses, presenting a valuable opportunity for property managers to invest in the resident experience. Seasoned property managers know that unexpected expenses happen, which is why it’s important to plan ahead for the year and budget specifically for maintenance.
Not sure how to get started? We got you! In this post, we break down the basics of budgeting for maintenance so you can elevate the resident experience while optimizing financial planning.
Property Maintenance 101
Property maintenance is a crucial part of property management. Regular maintenance helps maintain the property’s value and good condition, ensuring that it continues to keep residents happy, attract new ones, and help with positive reviews. It should include both routine and preventative maintenance. Here’s a list of basic routine maintenance areas, which focus on maintaining the property, preventing unexpected mechanical failures, and limiting unbudgeted expenses::
- Professional cleaning
- Garbage and recycling collection
- Seasonal property maintenance such as gutter cleaning and snow removal
- Cleaning and servicing HVAC systems
- Controlling pests
- Inspecting the building, electrical systems, and plumbing for issues
- Cleaning and servicing appliances
Typically, the costs for most of these maintenance areas are easy to forecast for the year. By being proactive and tackling these areas of maintenance, you can keep your property in great condition, saving money in the long run and creating an amazing resident experience.
How to Budget for Success
Before we get to the common rules of thumb for estimating maintenance expenses, let’s dive into the important steps needed to successfully budget for maintenance:
- Review Current and Past Maintenance Needs: Review your records to see your past maintenance requests. If there are recurrent issues, such as roof leaks or flickering lights, be sure to factor those in. They may be potential areas for improvement, and addressing any underlying may prevent additional maintenance requests.
- Estimate Regular Maintenance Costs: You know your property better than anyone, so it’s likely you’ve got the budget for your basic routine maintenance tasks down. These tasks, such as landscaping and commercial cleaning, tend to stay fixed month to month. Contact any necessary service providers in order to receive an accurate and updated proposal. It’s best to gather at least three different proposals for a service, allowing you to compare the vendors side by side. Look for differences in cost, reputation, and references – even if a particular bid is lower, you might opt for a different service provider that’s better known for delivering exceptional work.
- Don’t Forget About Seasonal Maintenance: Depending on where your property is located, you may need special maintenance tasks in certain seasons. Think snow removal in the winter, gutter cleaning in the fall, or pool openings in the summer.
- Keep in Mind the Property Age and Condition: An older property or one that is already in weathered condition will likely require more maintenance. Consider the age and condition of your property and budget accordingly if your property has an older roof or older appliances.
- Consider Upgrading Your Property: Periodic upgrades are an important part of property management, as they represent an investment in the property’s long-term value and the community’s overall well-being. Regular updates, such as new clubhouse furniture, upgraded flooring, and unit finishes, make a huge impact on the property’s aesthetic appeal and can drive longer tenancy periods.
How Much to Budget
In the world of multifamily property management, there are a few rules of thumbs when it comes to estimating annual maintenance costs.
- 50% Rule: Split your monthly rental income in half and dedicate one portion towards repairs, upkeeps, taxes, insurance, and other property-related expenses.
- 1% Rule: Estimate annual maintenance costs to be ~1% of the property’s value. For example, if a property is worth $200k, you can anticipate spending ~$2k on maintenance that year.
- Square Footage Rule: Save $1 per square foot each year for maintenance costs. For example, a 1000 square foot property would require an annual maintenance budget of $1000.
Although these rules differ, they generally lead to comparable estimates and can be used to provide helpful benchmarks. Keep in mind that these are approximations and the actual maintenance costs may be influenced by factors such as the property’s age, condition, location, and market changes. That’s why it’s important to adjust these projections with the specifics of your property, as outlined in our previous section.
Partner with BuildingLink
Trusted by condos, co-ops, HOA’s and multifamily properties around the globe, BuildingLink helps property managers deliver superior resident experiences while streamlining maintenance and operations. We offer tools that will simplify your record-keeping and administration, communications, maintenance, and front desk operations.
When you’re ready for smarter property management, book your BuildingLink demo today.