How to Create a Realistic Repair Budget That Protects Your Bottom Line

Creating a realistic repair budget is essential for keeping your rental property open and thriving. Here are potential items and areas to consider for repair, along with guidance for creating a realistic budget that will give you peace of mind. 

Repairs to Consider 

Considering potential repairs and their associated costs will help you determine how much money to allocate to your repair budget.

Water-Related Issues

Several issues can occur with water. General leaks in pipes cost an average of $350, with plumbers charging between $50 and $200 per hour. Problems with water heaters typically cost around $222 to $987, depending on the severity of the issue. Instead of repairing an existing water heater, it might be more cost-effective to replace it completely. In general, water damage costs around $1,300 to $6,500, depending on the extent of the problem.

HVAC Systems

While a full HVAC unit replacement can be a significant expense, repair costs range from $130 to $2,000, depending on the specific issue. Some of the most common are fan motor repair, refrigerant recharge, refrigerant leak repair and heat pump repair. 

Electric Problems

Electrical issues are inconvenient, but they can also pose safety risks due to the potential for electrical fires and property damage. An electrician may charge between $200 and $5,000, but the cost of a repair will depend on the issue. Professionals also require an additional service fee.

Apartment Doors 

A functional and secure apartment door is a necessity. While the average cost of a door repair is around $238, the price depends on various factors, like the impacted area, type of repair and even where the door is in your building. For instance, front or exterior entry doors cost more to repair than interior doors.

Garage Doors

Depending on the issue, it can cost between $68 and $860 to repair a garage door. If you find that it needs frequent repairs, it may be more cost-effective and safe to replace it. The average cost of installing a new garage door is around $350. Single-car garage doors typically range from $1,150 to $3,000. A double-car door costs $2,200 to $5,000, and a triple-car option costs between $3,400 and $7,200.

Pest Damage

Pests can cause significant damage, and it’s crucial to address infestations as soon as possible to avoid structural damage and health risks. Some of the most common culprits are cockroaches, rodents, termites and bed bugs. People typically pay between $100 and $260 for a single pest control service appointment. 

Broken Appliances

It can cost between $100 and $400 on average to repair an appliance. However, this varies depending on the machine and the specific issue. Many appliances, such as refrigerators or dishwashers, are essential for daily life, so addressing these repairs quickly is crucial to keeping tenants satisfied.

Plumbing

Plumbing issues can range from annoyances to major issues. A repair, such as a leaky faucet, may cost up to $350 if you hire a professional. However, some people opt for DIY fixes, which can cost only a few dollars if the issue is as simple as replacing a washer or the O-ring. This is another issue where time is crucial. Plumbing can be complex in a multi-unit property where the systems are interconnected and an issue in one unit can affect another.

Step-by-Step Guide for Creating a Repair Budget

To create a repair budget, plan for all eventualities. It is better to be overprepared, rather than underprepared.

1. Make a List of Expenses

Expenses for a rental property consist of fixed and variable amounts. Fixed expenses include annual taxes, insurance and loan payments. Repairs, marketing, and accidental or unexpected damage are costs that will vary. Creating a list of both gives an idea of how much money you can set aside for maintenance and repairs.

2. Create an Emergency Fund

Having an emergency fund prevents you from scrambling for funds at the last minute. A common guideline is to have at least three to six months of expenses saved. This fund will be your safety net for large, unforeseen repairs. 

A home equity line of credit is a good option. It works like a credit card and allows you to access emergency money from the value of your property. However, it’s essential to use this option wisely and have a clear repayment plan in place. 

3. Evaluate Your Cash Flow

Calculate your cash flow and assess how much you should regularly set aside for routine maintenance and future repairs. To do this, subtract your total operating expenses from your gross rental income. A positive cash flow means you have money remaining, which can be allocated to your repair and maintenance fund. 

4. Track and Adjust 

Regular adjustments prevent surprises and significant losses. Keep detailed records of all repair and maintenance expenses throughout the year. At the end, review and compare the expenses to what you originally budgeted. This will help you identify patterns and make more accurate projections for the future. 

Eliminate Risks with a Realistic Budget

Creating a comprehensive repair budget helps protect you from future risks. Conduct regular property inspections to identify and address small issues before they escalate. Staying on top of repairs helps you maintain a relationship with your tenants, build a positive reputation and protect your investment. 

Evelyn Long is a writer that specializes in housing market trends. She is also the editor-in-chief of Renovated Magazine, where she writes essential resources for renters and homeowners. She has contributed to several other publications like the National Association of Realtors and Realty Executives.