How much do you set aside for repairs each month when analysing?

Question

Hello everyone, how much do you set aside for repairs each month when analyzing a property?

The property has not be bought yet, has not been seen in person, the property is just listed on a website.

This
 question is specifically for when you analyze a property. How much do 
you factor in to know if a property will cash flow before you actively pursue it... Is there a ball park you use, or specific percentages?

Thanks in advance for your response.

Mike Mosee · Answer

I've found my average, including Capex, comes in at $150 per unit per month

Cody Neumann · Answer

@Amandeep Singh Bassi

It can highly depend on the condition of the property. I normally set aside 5-10% of monthly income. If you rehab the house first then rent it then you are looking at a lower cost but if you get somebody in there and it is a little rougher then I would say factor in a bit more. Don’t forget to factor in vacancy and cap ex as well.

Ammar Muhammad · Answer

@Amandeep Singh Bassi see this video. very helpful

Dan Armich · Answer

I still use Jay DeCima’s pro forma - 25% of gross overall. That comes 5% each in the buckets of loss of income, vacancy, repairs, maintenance, and management. I know 25% seems high, but if the numbers works with that, you usually have some good cash flow each month. - Dan

Ammar Muhammad · Answer

Hi I personally allocate 5% of the monthly rent every month for day to day fixes and another 5% of the monthly rent every month for large capital expenses. So overall I allocate 10% of the monthly rent. Lets say monthly rent is $1000. I will allocate 1000*0.1*12= $1200 per year for repairs.

Ammar Muhammad · Answer

@Amandeep Singh Bassi yes I also account for 5% for vacancy. And if I am getting a property manger then I account 10%. Most property managers charges between 9 to 12% of the rent

How much do you set aside for repairs each month when analysing?

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