Kansas City SFH Repair & Maintenance Budget
Rental Property Investor · Blue Springs, MO · Member since 2018 · 12 posts · 5 votes
What do you typically spend / budget for repairs and maintenance for a SFR in KC? This is probably the thing I am most unsure about when running deal analyses. I understand that this can vary a lot depending on the age of the house, type of neighborhood (and subsequently the quality of tenant), etc.
With that said, lets assume a recently fixed up house in a C to B- neighborhood. I'd like to get input from people who have been doing this for awhile and have some data to back up what they are spending/budgeting for R&M. Although any input would be greatly appreciated and useful as I have no experience on this topic...YET! My goal is to close on my first deal within the next 3 months.
I usually hire someone for day-to-day maintenance and then make myself available during turn over for the work that can grow very costly.
It could be very low if you do the work yourself or extremely high if you hire the company with the biggest ad in the yellow pages. I don't really worry too much about a budget if I am doing most of the heavy lifting even if the home needs substantial work because I know it will probably not bankrupt me unless I start hiring a bunch of people who value their time more than me.
@Jake Sanders from my experience in KC it’s all over the place. I have some houses that go years without needing anything and then other houses where it seems like there is maintenance issues all the time. Usually tenants complain the first 2-3 months after they move in about whatever is wrong and then they calm down. And then occasionally you get a big expense like a water heater goes out or furnace. A lot depends on how well the house was rehabbed and if preventative maintenance is done ...preventative termite treatments or making sure the soil is graded and gutters are clear and hvac/A/C serviced regularly. Also doing a yearly inspection of the house to catch small issues before they become big and make sure the tenant is keeping it in good shape.
I budget about $250-300 month per house for vacancy/maintenance and turnover cost & cap ex. That’s using a PM so definitely cheaper if I was handy & could do some work myself. Most months it’s under that amount but if I have heavy turnover then it goes more than that.
The one thing that will kill your budget is the property manager. Everyone always says get a good PM blah blah but what they don’t tell you is how incompetent so many of them are that know how to sell themselves and talk the talk & how screwed you are with a bad one.
Here’s some real life examples of stuff that’s happened to myself & some of my friends using KC area PMs to give you an idea: Not listing a property for rent until a month after it was vacant, not listing a property at all for rent (and owner finds out 3 months later after he keeps lowering the price and lowering the price and can’t understand why it isn’t getting any interest and then finds out PM never listed it), doing half a** repairs that have to be redone or cause more issues and money later, stealing rent money and telling you tenant never paid, putting horrible tenants in your place without doing background searches (they lie and say they did but you do a simple google search and felon mug shot comes up) & all hell breaks loose ...tenant trashes it, or you have to go through costly eviction cause they stop paying, can’t get your property rented to save their life ...months go by and you get feedback from interested tenants the PM never calls them back....upon confrontation they say they are busy and if a tenant doesn’t call them several times they assume they aren’t interested, being friendly with tenants and letting their rent slide for 4-5 months without eviction, using con artists repairmen who lie and say you need repairs that you don’t, PM paying an insanely high utility bill without question (from your money) or without inspecting for leaks/issues or that there isn’t squatters in there. Repairing an item that was clearly the tenant negligence and charging you for it ...I.e. broken door on microwave .......you get the idea. Between myself and all the investors I know investing in KC right now I can only recommend one good PM company there and about 10 to stay far far away from.
Long story but just be careful to choose a good ethical PM that is very detail and professional oriented as they can so easily kill your numbers. Just one mess up is your profit (&/or negative cashflow) for several years especially if you have a mortgage and thin profits.
@Jassem A. Great point. If I am doing the work myself, the repairs and preventative maintenance will likely cost a lot less. The only downside of analyzing my deals using this assumption is that if in the future I use a property manager (which is inevitable for my long-term goals) then it won't have a large enough margin to cover those expenses. What do you think?
@Laura Williams Have you had the experience with your tenants and the area where they tend to take care of minor issues themselves or is it always a call even for things as simple as a light bulb? Also, true, I guess I should make an assumption on those costs based somewhat on if I will be doing the repairs myself or not like Jassem said too.
Those sound like some very bad experiences. I am sorry some of that stuff has happened to you...I am sure there were many learning experiences sprinkled in there. If you don't mind my asking, which PM would you recommend?
@Jake Sanders it varies so much based on the tenant and the property. In general I usually get a lot less maintence request from men tenants than from woman. A lot of times if the men know how to fix something and it’s small they will just fix it themselves verses the aggravation of having a maintence worker come to their home. And it also depends on how much of a perfectionist the tenants are. I have a couple who call all the time but those properties are kept in perfect shape and they pay rent on time so I indulge them as most of their request are reasonable. And the other thing is how much they pay in rent and if the property is a higher end verses a cheaper property in a more working class. Usually the lower end properties people don’t complain about too much where as in a higher priced luxury rental they feel more entitled to complain about everything.
One tip I can give you is to not rent to people who complain about non existent problems before they move in. For example if they ask the property be professionally cleaned before they move in ....but the place is already spotless. Or asking for things like changing out a perfectly good lock on the front door or stuff done that doesn’t need to be done consider this a warning sign and don’t rent to them. My worst most filthiest disgusting tenants who caused me the most aggravation & called me screaming and threatening started out complaining before they moved in with small stuff that didn’t need to get fixed. Now I see it as a red flag as someone with mental issues and I would cancel a lease with such a person if it wasn’t too late. For example the lady who requested the place be professionally cleaned before she moved in ....never ever ever cleaned the place after she moved in and then expected me to pay her hotel bill cause she claimed her place wasn’t inhabitable & broker her lease. Or the guy who wanted the trash in his yard picked up & was constantly hounding my PM about trash in his yard was hoarding 5 dogs in his house and filthy & smelled like dog pee & I evicted him after only 3 months.
But in general my experience has been 95% positive with tenants & the bad 5% was where I could trace it back to screening of the tenants that could have been avoided. Most of my tenants have been normal and pay on time and if they ask for something to be fixed it’s legit.
As far as the light bulbs I’ve started using LED bulbs in all the light fixtures. I’ve found usually when tenants try to change the light bulbs they beak the fixtures plus it also saved money on electrical bills which helps with an older house.
I usually hire someone for day-to-day maintenance and then make myself available during turn over for the work that can grow very costly.
@Jake Sanders As others have mentioned, it varies a lot. A high percent of day to day maintenance expenses are plumbing related. If the plumbing has been updated and supply lines replaced, you shouldn't have many problems other than those cause by tenants. I would factor in $500/yr reserve for maintenance.
@Laura Williams I would also be interested in getting that list of PM's from you if that is possible! Just getting started, and wanting to start talking to PM's before I have a place.