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How Much Money Should You Save For Rental Home Repairs?

The cost of home repairs is one of the inevitable expenses that come with owning rental property. Regular repair and maintenance ensure that a rental home remains in habitable condition. Things that will require occasional repair in your rental include the plumbing, heating systems, electrical systems and appliances.

According to a 2019 survey on home repair expenditure, about 52% of Canadian homeowners had spent 2,000 CAD or more on home repairs in the past year.

However, deciding how much to save for home repairs is not easy. Since properties differ in age, type, location and condition, there is no one-size-fits-all approach. The good news is that there are several techniques you can use to figure out how much you need to set aside for repairs.

How to estimate rental home repair costs

Here are some formulas you can use to estimate your rental repair costs:

50% rule

According to this rule, 50% of the income generated from your rental home should be set aside for expenses such as maintenance, repairs, insurance and taxes. For instance, if you earn $3,000 a month, then $1,500 should go towards your fixed and variable expenses.

1% rule

This rule stipulates that one percent of your rental property’s value should be saved annually for repair and maintenance. Therefore, if your home is valued at $150,000, you need to save $1,500 annually for maintenance. To have a bigger buffer, you could adjust this to 2% or 3% of your home’s value.

Square footage formula

Estimating repair costs based on the square footage of the home is another commonly used formula. With this method of calculation, you save $1 for every square footage of your home. For example, if you have a 3,000-foot rental property, you should save about $3,000 annually for repairs and maintenance.


Though there is no way to budget exact figures, the formulas listed above will give you a general idea of how much you should save. Some landlords buffer their home repair budget with a home equity line of credit on one or more of their properties. This helps cushion them against unexpected large expenses.

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