How To Structure Maintenance Spending For Your Apartment Building

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Apartment maintenance expenses have the tendency to sneak up on you. Even though you’ve allocated a certain amount of dollars each month, pennies may be few by the time month end arrives. There always seems to be more month than dollars in the budget.

What can cause additional apartment maintenance expenses? Well, supplies are ordered every week, which can overrun the budget allocated for resident repairs and vacant apartment preparation. There could also be a higher level of resident service orders coming in, unit inspections, or move outs with a high volume of damages. However, you deal with these issues every month in an apartment complex.

How can you structure your spending, so there’s money left at the end of the month?

Create a Plan to Structure Your Maintenance Spending

When you create a plan for your spending, you have an overview of the schedule for your property for the upcoming month. Here’s what should be included in your plan:

1) Turnover Expenses: Do you know how many apartment units will be prepared for move in in the upcoming month? Generally speaking, there are roughly 10-15 items that are purchased and replaced for every apartment before the next tenant moves in. These items include things like sanitary items in the bathroom, drip pans for the cooktop, and caulking for the kitchen countertops, vanity, and shower area.

If you list out all the items you usually have to replace, along with their prices, you’ll have a pretty good idea of what the anticipated expense for apartment turns will be. After you figure that out, apply that amount to the number of apartments currently vacant to get an idea of your total potential expense for apartment turns. With future move outs known based on the number of notices you’ve received, you can order supplies ahead of time before the turnover process begins.

2) Service Requests: To get an idea of anticipated service requests, all you have to do is look back to your property record keeping to determine the average number of work orders received each month. If you get roughly 50 service orders a month, 20% of those requests usually require no replacement parts or supplies.

Around 60% of service requests will involve replacement parts that cost $20 or less. That total would come out to be $600/month. The remaining 20% of service requests cover more costly repairs and supplies averaging $50/request with a total of $500/month. When you add all those numbers up, your potential expense for service requests would be $1100/month.

3) Preventative Maintenance: Do you schedule different preventive maintenance tasks each month like checking smoke detectors or changing furnace filters? If so, that’s easy to plan and budget for. Figure out how many apartment units are scheduled for preventative maintenance, and determine the cost of your supplies. For example, HVAC filters for 100 apartment units will cost you $300 in supplies.

4) Budget Planning: Budget planning is the last component because you need to put together all your expenses from your other calculations. With your turnover costs, your property may have $75 in required expenses for each turnover. If there are four vacant units in your apartment, $300 of your monthly budget will need to be put toward your turnover expenses.

How to Structure Maintenance Spending

Add all your expenses together to determine how much should be budgeted each month. Let’s look at the numbers we discussed above. In this scenario, turnover is $300, preventative maintenance is another $300, and service requests are $1100/month. In total, your monthly maintenance spending would be $1700. If your apartment budget doesn’t support this final number, and it’s a typical month with nothing unusual, your apartment will always be at the end of maintenance funds before month end.

When you’re creating a plan for apartment maintenance spending, data is your best friend; it provides the foundation for your entire plan. Working with a plan will also allow you to identify shortfalls in your monthly budget. If you want to structure your maintenance spending, create a plan and use historical data.  

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