Maintenance is the expense new landlords underestimate most reliably. The property doesn't care whether you budgeted for it — the water heater fails on its own schedule. A written maintenance budget is what turns those surprises into routine line items.
The common rules of thumb
Three placeholders circulate for annual maintenance: the 1% rule (1% of the property's value per year — $2,800 on a $280,000 house), the 50% rule (all operating expenses combined, including maintenance, eat roughly 50% of gross rent on older properties), and a per-square-foot rule ($1 per square foot per year). They disagree on purpose — each is a sanity check, not a forecast. Use one to start, then replace it with your own trailing history.
What moves the number
Age and condition dominate: a 1920s triplex with original plumbing can cost triple what a 2015 build does. Tenant turnover is maintenance in disguise — each turn brings paint, cleaning, and small repairs. Deferred maintenance compounds: a $300 flashing repair skipped this year becomes a $3,000 ceiling repair later. Budget separately for routine repairs and for turnover costs.
Worked example
A 15-year-old single-family rental worth $250,000 rents for $1,900/month. The 1% rule suggests $2,500/year. Actual trailing costs: $1,400 in small repairs, one $450 appliance fix, and a turnover costing $1,100 — $2,950 for the year, about 13% of gross rent. Next year's budget: $250/month, revisited annually against actuals.
When this rule of thumb breaks
The 1% rule tracks property value, but maintenance tracks structures and use: a high-value property in an expensive market doesn't cost proportionally more to maintain, and a cheap old building costs far more than 1%. New construction runs artificially cheap for the first 5–10 years, then capital items start maturing at once. And maintenance budgets cover the routine — the roof and the HVAC belong in a separate capital reserve, or their arrival will flatten a year of cash flow in one invoice.