It’s impossible to predict the cost of annual property maintenance, but one can make some educated assumptions to establish an accurate budget. There are a couple of general rules that can help guide this calculation. Below are some factors to consider, and an explanation of the rules to set a property maintenance budget for your Bar Harbor property.
Factors to Consider in a Property Maintenance Budget
These rules can give you a ballpark estimate of annual property maintenance costs. They don’t take into account the home itself or the climate it resides in. There are several additional factors that have an impact on the cost of maintenance and repairs for a specific house. Maine tends to have older homes that are exposed to high winds, cold temperatures, heavy snow, and salty air.
Age: The age of the property can play a huge role. A new home built within the last 5 to 10 years will need very little maintenance, while homes 10 to 20 years old will need slightly more. Once a home turns 20 or 30, there’s a good chance that major components, such as the roof, may need to be replaced.
Weather: Homes in areas affected by freezing temperatures, ice storms, or heavy snowfall are subject to more strain than homes in areas unaffected by cold weather. Similarly, homes in areas where termites, high winds, heavy rains, and other extreme weather conditions or pest infestations experience more wear and tear.
Condition: Some homes are more than 100 years old but are in pristine condition, thanks to previous generations exercising careful maintenance. Other homes, however, have been neglected and shoddily repaired over the years. The older the home, the more impact a previous owner’s care (or lack thereof) will impact the home’s maintenance needs.
Location: Homes located at the bottom of a hill (where water drains and collects), in a floodplain, or in other areas that create environmental stresses will also impact the amount of care and maintenance it needs.
The One Percent Rule for Property Maintenance
A popular rule is 1% of the purchase price of your home should be set aside each year for ongoing maintenance. If your home costs $300,000, you should roughly budget $3,000/yr for maintenance.
The 1% rule has its limitations. Buying a property, when the market is high, doesn’t mean your maintenance budget will be elevated. In the same respect, if you buy when the market is low you shouldn’t discount your budget. Don’t determine your maintenance budget by market swings.
The purchase price of your property and its repair costs, in other words, are independent variables. They correlate only by the fact they’re both impacted by the cost of labor and materials in Maine. A reputable carpenter in Maine typically charged between $35 – $95 an hour or more depending on your area.
The Square Foot Rule for Property Maintenance
The Square Foot Rule is to budget $1 per square foot/yr for maintenance and repair costs. If you own a 2,000-square-foot home, for example, budget $2,000 a year for maintenance and repairs.
This rule makes slightly more sense than the 1% Rule because it’s directly related to the size of the home. The more square feet you’re managing, the more you’ll need to spend. One drawback to this rule is that it doesn’t account for labor and material costs. The market prices for contractors, labor, and building materials can vary significantly.
Adjusting Your Calculation
There’s no universal application to govern how much you should set aside for property maintenance and repairs. You also need to consider other factors like age and local weather to be significant factors. It makes sense to take a more holistic approach to prepare a property maintenance budget.
First, take the average of the 1 Percent Rule and the Square Foot Rule. If 1 percent of your purchase price equals $3,000, and the square foot rule equals $2,000, then your average is $2,500.
Next, add 10 percent for each factor (weather, condition, age, location, type) that adversely affects your home. If you have an older home, in a floodplain, in an area that experiences freezing temperatures, increase the total by 30 percent: $2,500 x 1.3 = $3,250 (or $270.83 per month).
There isn’t an exact science, but the important thing to remember as a Bar Harbor property owner you are budgeting for maintenance and repairs. Repairs will be necessary. You should talk with a professional, like Real Property Management Acadia, to help prepare in your property maintenance plan for your investment.
Updated February 16, 2021
Original Blog by BY PAULA PANT
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