estimating home maintenance expenses

​If you are a homeowner, especially a first-time homeowner, you will soon learn that home maintenance and repairs need to be included in your regular budgets.  How much money should you plan to spend on home maintenance and repairs? It's impossible to predict exactly what repairs your home will need, but average homeowner costs can be helpful and often fairly accurate. Using average costs, there are a couple of rules of thumb that can help guide this calculation. And you can adjust your initial results based on factors like the age and general condition of your home. 

​Rules of Thumb

​Two common rules of thumb estimate your yearly expenses based on the home value or on the square footage.  The first says that that one percent of the purchase price of your home should be set aside for repairs. The second says that $1 per square foot of your house should be expected each year for ongoing maintenance. For example, if your home cost $250,000, you should budget $2,500 per year for maintenance; or, if your home is 1,500 square feet, you should expect a long-term average of about $1,500 per year for maintenance and repairs. 
​
That doesn’t mean you’ll spend that set amount every year. It just means that, on average, over a span of a long time period (10 years or more), you’ll spend this much annually. Some years you’ll spend far more; a roof replacement or a new furnace or air conditioner, for instance, might cost significantly more than your yearly budget, but you will spend much less in other years.

Special Factors to Consider

​While these rules of thumb can give you a ballpark estimate of annual maintenance costs, they don't take into account the age or condition of the home itself or the setting that it resides in. There are several additional factors that have an impact on the cost of maintenance and repairs for a specific house.

Age of the home:  The age of the property can play a big role. A new home built within the last 10 years or so might need less maintenance, while homes in the 10 to 20 year old range could need more. If a house is more than 20 years old, some of those original components are probably near the end of their useful life and may need to be replaced if they have not been replaced already. 

Some homes are more than 100 years old but are in fantastic condition thanks to the previous and current owners paying close attention to care and maintenance. Other homes, however, have been neglected and poorly repaired over the years. The older the home, the more impact a previous and current owner’s care (or lack thereof) will impact the home’s maintenance needs. 

Workmanship:  The quality of any work completed on the home can have an influence on the long-term maintenance and repair costs.  An addition that has poor workmanship may not only need repairs but may also indicate that a former homeowner may have done other low-quality work on the property that could need future repairs. 

Weather:  Homes in Minnesota and other areas affected by freezing temperatures, hail storms, strong winds, or heavy snowfall are subject to more strain than homes in areas unaffected by cold weather.  Many of the large repairs caused by the weather can be covered by insurance, but the deductible and smaller damages that do not warrant an insurance claim will eat away at a part of your budget.

Skill level:  Are you a qualified DIYer who can correctly do many of the home maintenance projects that might come up?  This can have a significant impact on your yearly spending.  If you are able to complete small projects on your own, those repairs will cost much less than needing to hire a handyman or contractor.  Be sure that if you do repairs yourself, you check with your local jurisdiction for any permit  and code requirements.  

Type of home:  Are you living in a single-family home or a town home or condo?  A detached single-family home needs a larger maintenance budget than a town home or condo because you will be responsible for exterior maintenance such as roof, siding, gutters and landscaping.  Those repairs for a condo or town home are normally covered under a homeowner’s association and you pay for that through a required monthly payment. 

​Estimate the Big-Ticket Items

Generally, there are certain items that are expected to need replacement over time that can be considered “big-ticket” items and will be a large percentage of your maintenance budget.  The roof, furnace, air conditioner, hot water heater, appliances are all items that have a life expectancy.  If you can tabulate these items, their approximate remaining life expectancy, and their estimated cost to replace, you can come up with a yearly repair estimate.  See my previous blog on life expectancy of a few of these larger items.  If you know the approximate age and life expectancy of these big-ticket items and have a reasonable estimate for replacements, you can use that to calculate a yearly cost for those, which will constitute a huge percentage of your long-term maintenance costs.
 
For example, if a new furnace costs about $4,000 installed and has a life expectancy of 20 years, you can assume a yearly cost of $200.  But, if that furnace is already 18 years old and you have not budgeted for its replacement in the near future, that cost could be $2,000 per year over the next two years to make sure to have enough set aside.  The same methods can be used with your roof, air conditioner, appliances and other more expensive projects around the home.  Take your annual cost of all of those “big ticket” items and add about 10-20 percent to come up with a ballpark estimate of yearly expenses.  

​Now What?

Now that you’ve put together your home maintenance estimates and budgets, what do you do with them?  You can just feel good about having them, but it won’t do any good if your air conditioner goes out and you have not set aside the funds needed to replace it. 
​
I suggest opening a separate account to be used for home improvements and repairs.  Take the average of your estimated monthly expenses and deposit that into your account each month with maybe even 5-10 percent extra as a contingency.  Try to use that money only for home maintenance and repairs so that you are prepared when a home emergency arises in the future.  Consider it a bonus if you are able to save a little bit on your repairs or if you file an insurance claim for one of your big ticket items.  Consider it money well saved if something goes out any you have the cash on hand to replace or repair it.