Repair/Maintenance Fund (for new potential homeowner budgeting) - necessary if you had a good home inspection?
I've always heard that the general rule of thumb says that you should set aside 1% of the total value of your property per year. You set that aside for your "Repair/Maintenance fund". This is the fund that you use, if you have to get a roof leak fixed, or you have plumbing issues or electrical issues. Maybe you need a new furnace. Maybe your AC goes out.
Anyways, if the house is 700k, then that means that supposedly, you're supposed to set aside 7k per year into this fund, to prepare for when you might need those funds for repairs. That factors out to about $583 per month that you'd put in this repair/maintenance fund.
Here's my question:
Assuming you had a good home inspecition when you bought the house, would you really need to do this with the maintenance fund? Reason being, I'd imagine your home inspector would have pointed out all the various problems and you'd have either negotiated with the seller to get them fixed, or to get a discount on the purchase price for some of the problems, or however you'd potentially work that out. But, it'd seem like you'd probably fix or handle the issues that really need handling, right around the time of the house purchase or shortly thereafter.
So, it'd seem like maybe you wouldn't need any repair/maintenance fund for the first couple of years at least, again, assuming you had a high-quality home inspection done, and the inspector really knew his stuff, and pointed out every potential problem to possibly rectify, sooner, rather than later. Assuming that was done very well, the only other thing you'd need to worry about in the first couple of years is something super random, and most likely your homeowners insurance would cover it. Of course, I do understand the line of thinking that says that you don't want to have claims on your homeowners insurance early on in the life of the policy or your time being at that property.
Just curious what people thought about this
Posted Nov 10, 2024, 1:12 AM UTC