Real estate & rental
Rental Maintenance Reserve Calculator
What to set aside each month for the components that will certainly need replacing.
Result
Building up from real components is far more accurate than the usual rules of thumb, which range from 1% of value to 10% of rent and can differ from each other by a factor of three. An older building needs more, and a recently renovated one genuinely needs less for a while.
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About this calculator
Is the 1% rule good enough?
As a rough check, and it is better than nothing. It ignores the building's actual age and condition, which is exactly what determines whether the next five years are quiet or expensive.
Should the reserve be in a separate account?
It helps. Money that stays in the operating account gets spent, and the point of a reserve is that the roof is funded before it leaks rather than after.
The formula
reserve = sum of each component's replacement cost divided by its remaining life in months
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