It’s crucial for property owners and managers to calculate a maintenance budget to ensure that they allocate sufficient funds for the upkeep of their properties. A strong property maintenance process is essential for creating a positive living experience for residents, preserving property value, and fostering positive relationships between a property management company and its investors. For more information on how you should budget for property maintenance, check out this comprehensive article.
Here are the best practices for calculating a property maintenance budget:
- Inventory and Assessment:
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- Create a comprehensive list of all the items and systems that require maintenance in the property.
- Categorize them into different areas such as plumbing, electrical, HVAC, landscaping, structural, etc.
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- Regular Maintenance Costs:
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- Estimate the cost of regular, routine maintenance for each item or system. This includes tasks like cleaning, inspections, and minor repairs.
- Use historical data or industry averages from Property Meld to get an idea of past maintenance costs.
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- Scheduled Inspections:
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- Identify items that require periodic inspections. This could include roof inspections, HVAC system checks, or pest control.
- Estimate the frequency of these inspections and their associated costs.
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- Emergency Repairs:
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- Plan for unexpected repairs or emergencies. Allocate a percentage of your budget, like the 1% rule, to cover unforeseen issues.
- Consider factors such as the age of the property and the condition of its components when determining this contingency fund.
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- Replacement and Upgrade Costs:
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- Determine the lifespan of major components in the property (e.g., roof, HVAC systems, appliances) and estimate the cost of replacement or upgrades when necessary.
- Allocate funds annually to build up reserves for future replacements.
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- Labor Costs:
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- If you have in-house maintenance staff, calculate their labor costs including wages, benefits, and training.
- If you outsource maintenance, obtain quotes from service providers for regular maintenance tasks.
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- Materials and Supplies:
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- Estimate the cost of materials and supplies needed for maintenance tasks. This includes paint, cleaning supplies, replacement parts, etc.
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- Utilities:
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- Consider utility costs associated with maintenance activities. For example, the energy costs of running equipment during maintenance.
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- Technology and Software:
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- If you use maintenance management software or other technology tools, like Property Meld, include the costs associated with software costs.
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- Calculate the Total:
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- Add up all the estimated costs for regular maintenance, scheduled inspections, emergency repairs, replacements, labor, materials, utilities, technology, and compliance to get the total budget.
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- Review and Adjust:
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- Regularly review and adjust your budget based on changes in the property, market conditions, or unexpected expenses.
Remember that it’s always better to aim high rather than underestimate when creating a maintenance budget to ensure you have sufficient funds to keep the property in good condition. Additionally, updating the budget regularly based on actual expenses and changing circumstances will help you make more accurate predictions for future budgets.
Without a maintenance budget, property managers may end up spending too much on both routine, and emergency maintenance repairs. Without the ability to compare what vendors are charging you, and your average maintenance spend per unit, it is difficult to understand if your spend is in line with industry standards.
Property Meld allows you to compare your average invoice cost, average maintenance spend per unit, and more maintenance-related costs with others in the industry to see how you are comparing to competitors. In addition, you can compare your current spend to past time frames to see how things have changed and make more accurate predictions moving forward.
Schedule a demo with our team to take care of your maintenance budget, and stop bleeding costs!
