A common rule of thumb is 1% of the property value per year. So for a $200,000 home, you should expect $2,000/year of maintnence costs. This is too general for me as I’m looking to use numbers in my favor. Here is a list of some of the specific items to find details on:
- HOA fees and what they cover. In some multiunit places this might cover bigger ticket items like exterior paint, lawn care, and roofing. Another important detail is how fixed is this number. Has it always been what it is now or is there a history of it being raised regularly. You wouldn’t want a greedy HOA board eating all your profit.
- Lawn care. To answer this you need to know the size and type of landscaping. Then you need to know what reputable local companies charge to keep this up.
- Exterior. Is it brick or siding? If siding, how long has it been since it was painted?
- Roof. This is a big one that can eat your lunch. You should know the history of the roof before you move forward. How long as it been since it was replaced? Who did the work? Is there any sort of warrantee? How much of a problem is hail in the area?
- Interior flooring. Hardwood requires you refinish it every so often and carpet goes bad. Ideally you would have vinyl everywhere with some rugs that can be replaced easily in-between renters.
- Appliances. Does the house come with new appliances? What does it cost to replace each one? How long are they expected to last?
- HVAC and water heaters. When was the last time it was serviced? What does it cost to replace? How long do you expect it to last?
This is a good start. The only way to really know is to go get data. All of these questions could be answered by directed questions for the seller, however there should be someway to do better than that.
A trusted real estate broker gave me the advice that expenses are often underestimated and some investors have found that small condos are better for this reason. The exterior work is handled for all the properties at once and you pay for it together though an HOA fee. This reduces costs of the maintenance. The other way to reduce cost is by having better customers. The single professionals and childless couples that rent condos are generally much nicer to your property than the families that rent single family homes. This makes sense, now I just need to find data to test this. Truth is in numbers.