I was hoping to get some advice on estimating repair costs. I've spent quite a bit of time figuring out how to account for capital expenditures and I feel I have a good handle on that. I'm estimating two ways, as 5% of gross rental income each year and as a table listing each expenditure with it's estimated replacement cost and lifespan (thanks Brandon). The figures are comparable and allow for scenario analysis.
With repair costs I'm struggling to find any guidance on BP though. I am using a figure of 5% of gross rental income for this too, but that seems high to me now. So my question is this:
Is it fair to use the same estimate for both cap ex and repair costs? I see repair costs as minor items like changing light bulbs, fixing minor broken items around the house, cost of hiring a handyman if necessary, etc. I don't believe that these should equal the cap ex allowance so now I'm thinking I should lower my repair cost allowance to say 2.5%. Any guidance would be much appreciated!
Also, one follow up question...
If it's a condo building, wouldn't the HOA fees include some of the cap ex (roof, landscaping, structural)? So I feel like I'm double counting if I include these items in my cap ex allowance.
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