How much should a Landlord Allocate for Monthly Maintenance?

Investing in rental property is one of the wisest decisions any person can make. Rewards are always attractive and collecting rent every month will enable you to pay your mortgages and other personal expenses and pocket the rest. However, what is unknown to many people is that to maximize your rental property returns and succeed as a landlord; you will need to plan and properly allocate your monthly expenses and costs. This will not only increase your returns but also keep your rental property valuable and in excellent shape, maintain your tenant’s quality of life and keep them happy. Your monthly expenses range from repair and maintenance costs, property management fees, HOA fees, insurance expenses to property taxes and other costs.

If you wish to apply and begin the process of getting a loan or mortgage for your rental property, Wildcat lending is your ideal choice. However, it is important you learn from the best and get an insight on how to succeed and maintain higher returns with your rental property as you get your loan. This also includes proper estimations and learning what percentages to allocate based on the income of your rental property.

Industry Rule

The ‘common rental property investment wisdom’ or ‘rule’ is to allocate 1 percent of your property value annually for repair and maintenance. For instance, if your property is valued at $300,000, you should put aside a minimum of $3,000 to cater for the repair and maintenance for that year. That also translates to at least $250 a month if the $3000 is divided into 12 months in a year. You can also discuss with your property manager the accurate amount to set aside. It is still important that you ensure this industry rule is first allocated to conduct timely maintenance and repair. It will especially come in handy when miscellaneous maintenance is required such as changing light bulbs, cleaning and maintaining the heating unit.

Property Management Fees

Sometimes, seeking the services of a property manager is unavoidable especially if you live in a faraway place from your rental property, you have too many responsibilities or you simply need their experience to run your property efficiently. They will help you keep your property in proper shape as well as deal with the tenants more effectively. Typically, the cost of hiring a property manager is around 6 to 8 percent of the monthly rental fees. Always allocate the property manager cost if you plan to have one whenever you are analyzing your monthly rental costs.


It is wise to contact or seek the services of an experienced insurance agent to run over all the specifics of your rental property and provide you with an exact estimate of the insurance cost and monthly premium to pay. You should also consider special insurance coverage such as flood especially if your property is close to the ocean, and other special insurance coverage like an earthquake.

Occasional Repairs

You will need to allocate additional costs that may arise periodically in your monthly expenses. These costs include plumbing, roofing, electric, heating, and cooling systems. You should especially consider these expenses when you have taken time to conduct these periodical repairs to your property. Also allocate funds for occasional painting, window and door repairs, appliances maintenance and minor carpentry especially when a tenant moves out. Also set aside the funds if it has been a while since the last maintenance was conducted in your unit (s).

Home Owner’s Association (HOA) Fees

HOA fees apply to maintain common or shared spaces and cover many areas such as shared structures, swimming pool, and landscapes. It is important you keep updated on the current HOA fees and even consult your property manager to find out the exact monthly amount you expect to pay. Also, enquire or find out if they will rise and how often do they rise if it happens.

Special Assessments

In numerous cases, your local municipality or homeowner’s association may enact special assessment that will compel you to get into your pocket. There are no clear ways to predict future special assessments but it is wise you talk to your neighbors or fellow residents and find out whether there are any assessments currently in your neighborhood.

Property Taxes

Always find out the precise amount of the current property taxes when analyzing your monthly expenses. You can call your county assessor and confirm especially when buying a new rental property because the amount might be different from the one the seller was paying.

Anticipated Cost

Besides the expected and occasional expenses, as a rental property owner, you should prepare for anticipated cost and set aside some funds. The cash will come in handy in case of emergency repairs, replacement of the entire heating and cooling unit or roof especially if the property is aging. The money is also useful in covering infrequent costs such as tenant screening and vacancy advertisements when the unit(s) falls vacant.

As a rental property owner, you should get maximum returns from your property. The key way to ensure maximum profits is to never underestimate your expenses and find out the exact cost and budget for it. This general guidance will help you in ensuring your monthly costs are accurately estimated and also provide detailed information on how you will reach out to your exact estimate. Contact us at Wildcat lending or give us a call and come in and talk to us about any pressing question you might have regarding the calculation of your monthly rental expenses. We will provide you with ideal and working solutions that will enable you to get the most out of your hard money loan through maximum returns when investing in a rental property.