Rental repair reserve calculator
How much to put aside each month so the next water heater doesn't come out of your pocket. Compare the two rules of thumb landlords quote, and see how long it takes to build the cushion you want.
Set aside each month
$125–$500
$1,500–$6,000 a year
1% of value
$6,000/yr
$1 per sq ft
$1,500/yr
To reach $6,000
1 year at $500 a month · 4 years at $125
The two rules of thumb
- The 1% rule: set aside 1% of what the property is worth each year. Simple, but it rises and falls with the market, not with the building.
- The square-foot rule: $1 per square foot each year. It follows the size of what you actually have to maintain.
Plan toward the higher figure if the building is older, has a pool or a lot of appliances, or turns over tenants often. Plan toward the lower one for newer buildings with long-staying tenants.
Questions landlords ask
- Is the 1% rule accurate?
- It's a starting point, not a measurement. It follows the property's price, and where land is expensive most of that price is land that never needs repairing — so in high-cost areas it often overshoots. The square-foot rule follows the building instead. Your own repair history beats both once you have a year or two of it.
- Should I budget per unit or per property?
- Budget for the building, then split it by unit to see what each one needs to carry. Shared systems — roof, water heater, sewer line — belong to the whole property.
- Does the reserve cover a new roof or HVAC system?
- Not usually. A repair reserve is for the steady run of fixes and turnovers. Big replacements come every 15–30 years and are worth saving for separately, based on how old each one is.
- Is money in a repair reserve tax-deductible?
- Setting money aside isn't an expense. The repairs you pay for are what count, so keep every invoice — and ask your tax preparer which jobs are repairs and which are improvements.