Repairs & Maintenance, Capital Expenditures, and Vacancy?

Question

Hey everybody,

Would love to hear what everyone is allocating towards these areas each month. I understand that the amount you allocate varies from location to location as well as the many factors of the actual property itself such as when it was built, the roofs condition, whether or not it has certain amenities, etc.

But I would still love to hear what you guys are doing and why? What's your reasoning? Etc.

Thanks!

Jim Johnson · Answer

I tend to look at it less as fixed percentages and more as the property's actual condition and history. Two properties with the same rent can have very different maintenance and capital needs depending on age, deferred maintenance, and major system lifespans.

Vacancy is similar. If a property has a history of longer turnovers or sits in a more seasonal market, I'll budget differently than I would for one that leases quickly every time.

Having reserves is more important than hitting a specific percentage. You don't want a roof replacement or HVAC failure turning into a financial emergency just because the monthly budget looked good on paper.

Patrick O'Sullivan · Answer

There is no one-size-fits-all number, but I like to budget separately for each category so I know what is actually happening. Vacancy depends on the market and tenant turnover. Repairs are based on the age and condition of the property. Capital expenditures are long-term items like roofs, HVAC, and water heaters, so I build reserves for those over time instead of treating them as surprises.The important part is having separate buckets for vacancy, routine maintenance, and major replacements so one expense does not throw off your entire budget.