How to Calculate Maintenance Payments
Maintenance payments are an important consideration to bear in mind when investing in something. This is because maintenance is not necessarily an ongoing cost but one can strike unexpectedly and with large payments. For example, if you own a house that you rent out, you may find that after three years of no maintenance that it needs a new $15,000 roof. You need to compensate for this in your budget beforehand rather than scramble for money afterward.
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Instructions
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Calculate the depreciation on your investment. The simplest way to do so is to use straight line depreciation--take the initial value of the investment and divide it by the expected life of the investment. So if you have invested in a car you are going to lease out for $50,000 and you expect to sell it for $10,000 in five years, then your car is depreciating at $8,000/year (50,000-10,000 is $4,0,000, divided by 5)
There are other depreciation methods, but they differ according to what is being depreciated. Straight line depreciation gives a rough idea of anything's depreciation.
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Calculate the amortization on the intangible aspects of your investment. A good example of this is if you are leasing cars in an area where the car leasing market is growing. If you expect to be able to rent your car out for $20,000 per year in your first year but have to drop your prices to $17,000 in your second year because of competition, then your amortization for that year was $3,000.
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Add one year's depreciation and amortization together. In this case, the figure is $11,000. This means that you need to budget that much money for maintenance in a given year.
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Tips & Warnings
Remember that, according to the website Old School Value, "maintenance is an art, not a science." You should budget accordingly and remember that it's better to have too much for maintenance than too little.
