Repair/maintenance budget?

How much do you budget per property on repairs and maintenance a year?

Looking back I've spent approx 5k each year for the past 2. Makes me feel like I'm being taken for a ride by the tenants, pm and tradies.

 

Depends on the condition of the properties. Older, run down properties will obviously need more repairs than newer, well-kept ones.

Try to inspect each property annually. You can often discover small issues that you can rectify before they become bigger, more expensive problems.
Marg

 

2k per year

 

You also have to consider the value gain of your property.
Lets consider you bought it for $600,000 and if you did a smart investment, the property value should increase by around 15-20% per year.
So $600,000 by 20% you gain $120,000 per year minus council rates lets say abundant $1,500, $5,000 for repairs and you still gain around $110,000 per year.

 

Umm increase by 15-20% per year? That would be a very rare event and shouldn't be used in assumptions even if it's a smart investment.

 

That is what the council said about my property, 2018 estimate 18.5% increase compared to the previous year.
But my numbers above are just to give an idea so if the increase isn't 20%, it should at least be 10-15% otherwise you made a bad investment.
The gain still covers repairs and much more.

 

I'm not doubting it can happen but it's not a good idea to rely on it. Property goes up and down and a good buy might average out as 5% growth when you look at it over 10 yrs.

 

That is a very personal opinion as it depends on where, when and what you buy.
By the way, if you pay (for example) $500,000 for your property and the average growth is 5% (your assumption), it means in one year you virtually gained $25,000 which is well far more than what you spend on repairs and council taxes.

 

Shutup and take my money!

 

You should become a buyer's agent.
You get me 15-20% year on year, I'll use you for EVERY purchase I make.

 

It's called research before you buy:
The revaluation in 2018 has shown residential properties in Greater Geelong have increased in value by an average 19.6%, compared to the previous revaluation

They might be exaggerating a "little" in order to carve as much council taxes they can but it's still close, maybe in the real life it's only 13-15% but still profitable.

www.geelongaustralia.com.au/valuations/article/item/8cde36208186b8a.aspx

 

Oh, you're talking about the valuations they use to determine your rates...
Maybe I don't want you as my buyer's agent

I think you'll find a 7% actual increase (not for rate determination) is more accurate.

 

Let me know how you go budgeting all future projections around 15% growth every year.

 

Who ever said I would like to?

 

Getting back to the original query, we had a client once who told me they put aside the money they received on depreciation as a fund for repairs when needed. Their logic was that if depreciation is compensation for wear and tear on a property, it made sense to have it available for that purpose.
A very organised client with much more discipline than me.
Scott

 

I assume you mean the value of the tax deduction for depreciation, or the tax effect of the depreciation ... otherwise I want a property that gives me money for depreciation!

 

Yep.