I am new to investing and am in the process of buying my first investment property which I will live in and rent out. My question is I know most HOA's cover the majority of the exterior maintenance expenses for condos. That being said on average what % of rental income should be budgeted for CapEx and Maintenance expenses? I have seen a number of people saying they budget 8-15% for maintenance and 5% for CapEx but that was for multi family units.
Thanks in advance for your input.
What does it cost you to recarpet and paint the place? Are going to replace fixtures or cabinets, new windows? Is there a special assessment on the horizon?
I have a condo that I just rented and I am not budgeting anything as the potential expense isn't large enough to worry about.
What would a complete remodel cost? Expect that since your renters could wreck it to the point where it is required.
We own rental condos and our biggest expenses have been the A/C units and or water heaters, unless you're doing a full interior rehab. If the appliances are in high-end units and are new, they may be under warranty for a year or two; if not, typical lifespan could be 5 - 10 years depending on the way tenants treat them. Washers/dryers and dishwashers tend to go faster, due to abuse and so many more moving parts. Refrigerators and stoves can last a very long time. Built-in microwaves, not so long.
Other than big ticket items which we usually know about when we buy the units, we budget about $150 a month per unit. And some units rarely need anything. Some need a lot. Depends on the unit and the tenant. That's our average, and based on the average rents, it's about 10% a month. Hope this helps.
We had tenants destroy a unit in March, tenants that had been very good for several years. We replaced the bedroom flooring, had to paint the entire place, had to re-sand and re-stain the cabinets after they decided to do that themselves, had to remove and repair the kitchen wall where they installed a backsplash (poorly), repaint the patio that they spray painted, fixed broken cabinet doors and drawers, replaced a stolen fixture, paid a cleaning team for 3 days of cleaning up the filth, and many other things.
This is rare for a condo, however, and had we periodically inspected, we would have avoided most of this.
Windows are usually the responsibility of the owner, as are doors. Sliders may be covered by the association.
Thank you both for your input. Aly the $150 a month per unit number does that take into account both CapEx and Maintenance expenses? Also, HOA fees seem to be a variable that's hard to control. Do you put aside an allowance to factor in for HOA fees being raised?