Do you know what percentage of your net rental income goes to maintenance?
Don’t worry, it’s not a test, but it’s surprising how many property owners we talk to every day that are unprepared for maintenance costs. I bet you know how much to set aside for the tax accountant, the council rates and even your car registration, but how flexible is your budget for any potentially unexpected investment property maintenance costs?
Thankfully one of the advantages of building or buying a brand new investment property from a reputable builder is you manage to minimise maintenance costs for a number of years, but you can’t avoid them altogether.
Here is a rough expense matrix for an average 3-4 bedroom home on a 12 month lease cycle.
|Internal painting||7 years||$2,500|
|Hot water service (replace)||7 year||$1,300|
|Carpet (replace)||5 year||$2,000|
|Window coverings (replace)||5 years||$2,000|
|Gas heaters (service)||2 years||$100|
|Garage door (fix/service)||2 years||$200|
|Electrician call out||2 years||$100|
|Plumber call out||1 year||$200|
|Air conditioners (service)||1 year||$250|
|Gutters (cleaning)||1 year||$150|
|Window cleaning||1 year||$300|
|RCD & Smoke Alarm tests||1 year||$100|
This works out to $3,100 per year over a 7 year period.
Which means if rental yield is 5% on a $500,000 house, maintenance costs 12% of gross rental receipts every year.
Maintenance is a critical part of investment property management, but it pays to think about outgoings in advance, not just at tax time when your accountant stirs up the painful memories with a handful of receipts! Maintenance costs for investment properties can be claimed at tax time, however it always pays to be prepared.
If you need any assistance calculating or budgeting for investment property management and maintenance costs, contact your ABN Realty Property Manager on (08) 9200 7200 or email firstname.lastname@example.org