Owning an apartment building brings with it many costs and responsibilities to maintain the property.
For those interested in purchasing an apartment complex, be aware of the maintenance costs. For those renting, being aware of these costs is helpful as well. Exactly how much does it cost to maintain one of these buildings?
This depends on the property. Apartment buildings range in size and accommodations, varying the cost of maintenance. There are many factors that go into maintaining an apartment complex, therefore bringing different costs.
As with any property maintenance, the devil is in the details. Knowing the details of the property in question will bring a good insight into the maintenance costs of that property. As with any form of housing, the cost depends upon what you are working with.
Basic Costs of Maintaining an Apartment Building
The cost factor of these buildings will vary, depending on the property. There are general costs that will be tacked on to most complexes, however. The general costs of a building will include, but are not limited to:
- Property Management
- Utilities
- Repair and Maintenance
- Property Taxes
- Insurance
These cost factors will be the general ones most property owners will face when maintaining an apartment complex. These costs will also vary by the complex. The full costs of maintaining an apartment do not just boil down to keeping the lights and water running.
Be aware of these costs and how they can vary. Understanding the costs helps both property owners know what they are getting into, as well as renters to know what exactly they are paying for at the beginning of each month.
Apartment Buildings and Property Management
Property management is the general labor cost associated with workers maintaining the complex grounds. Depending on the size and accommodations of the apartment complex, there can be various maintenance workers on the property. These workers usually perform certain functions and will expect compensation accordingly.
Luxury apartment buildings, such as condominiums, will likely have a few groundskeepers and workers on hand to react to any immediate situation. These range from maintenance workers to security staff.
Be aware that luxury apartments will likely require more specialized property management:
- The average pay of maintenance workers in the United States is between $18-$20 an hour
- Security guard pay usually ranges from $13-$15 an hour
These workers will expect adequate compensation for the tasks assigned.
Complex managers are also a part of the package. Average salaries for complex managers usually range around $18 an hour. The pay grade can be higher or lower depending upon the apartment complex and the duties required.
Apartment Buildings and Utility Cost
“Utilities” is a broad term that encompasses many different things. Most renters think of utilities as electricity and water. For property owners, however, utilities mean much more than that. Utility costs for property owners, in this case, range from:
- Water
- Electricity
- Gas (if applicable)
- Sewage
- Trash Collection
Each of these costs varies depending upon the apartment complex. Many complexes do not use gas stoves or water heaters, so that will eliminate an extra utility cost (being mindful that it will increase electricity use). Property owners are also responsible for sewage maintenance costs as well as the cost of trash collection.
These utility costs, like with others, will depend upon the apartment complex. Higher-end apartment buildings will likely be equipped with more quality (and expensive) utilities. The population of a complex also helps determine utility use.
Utility costs for an entire building can range from thousands to tens of thousands of dollars a month. This cost depends on the quality of utilities available and the number of people living within the apartment complex.
Apartment Buildings and Repairs/Maintenance
Repairing and maintaining utilities and other factors come with their own varied costs. Depending on the complex (and utilities), these costs can be fairly cheap or expensive. Apartment appliances will have to be repaired from time to time, and these repairs will have varying costs.
Repairing a home appliance (such as a stove) can range from $100-$500, depending upon the quality of the appliance. Repairing a plumbing issue is more expensive and can range in thousands of dollars. Repairing an air conditioner or heater is also much more pricey, depending upon the appliance. Some buildings will tack on maintenance fees which can range from $50-$1,000, depending on the complex in question.
Maintaining complex grounds also comes with its own costs. Gardens and grass lawns will have to be upkept, using water and labor costs associated with them. There are also costs associated with simple maintenance such as:
- Drywall
- Carpeting
- Windows and Blinds
Maintenance and repair supplies also have mounting costs. Luxury apartments, for example, could keep many supplies on hand that could range up to $10,000 in cost. The more intricate an apartment and its utilities are, the more likely higher supply costs will be added onto that.
Apartment Buildings and Property Taxes
All property owners will likely face property taxes. There are different ways that localities will use to dictate property taxes. In general, higher property taxes are associated with more up-scale properties and inhabitants.
Luxury apartments will likely have a higher property tax associated with them. Renters do not deal with property taxes, yet these taxes can determine how much higher the rent will cost. Property owners are trying to turn a profit on their apartment buildings, of course, so they will likely not eat the cost of property taxes alone.
If you are a potential apartment complex owner, be aware of the location of the property you are interested in. The better the location, the higher the property tax can be. Property taxes also vary based on location. Property taxes in the Los Angeles area, for example, can range up to $5,000 a month for a luxury apartment building.
Apartment Buildings and Insurance
Aside from property taxes, owners of these buildings have to keep their property insured from potential damages. The available insurances range from:
- Fire Insurance
- Flood and Storm Insurance
- Miscellaneous Damages
There usually are no one-size-fits-all insurance plans. Property owners will likely have to purchase separate insurance plans for different eventualities. Knowing what insurances you will need depends on the location of your apartment building and what disasters are likely to visit it.
If your potential property is located by a water source (ocean, river, etc.), then it is likely your complex will be affected by storm damage or flooding. Fires are common occurrences regardless of location. The key here is knowing what damages are likely to befall your property.
Again, different eventualities will need different insurance plans. Basic fire insurance for an apartment complex can range up to thousands of dollars a month, depending upon the complexity and extent of coverage.
Conclusion
The costs of maintaining an apartment building vary depending on the property in question. In general, the various costs can range within tens of thousands of dollars with the costs added together. Some total costs can exceed $100,000, depending on factors like property management, utilities, maintenance, property taxes, and insurance.
There are hidden costs to any property purchase, of course. In general, the listed factors are the key costs to watch for. When these costs are added together, it reveals just how much money is really needed to maintain a quality apartment complex.
If you are planning to invest or purchase an apartment building, be aware of these total costs. The more you are aware of the financial risks and requirements, the better a purchasing decision can be made.
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Sources:
https://theresabradleybanta.com/what-are-typical-apartment-building-operating-expenses/