What Are Maintenance Expenses?
The term maintenance expense refers to any cost incurred by an individual or business to keep their assets in good working condition. These costs may be spent for the general maintenance of items like running anti-virus software on computer systems or they may be used for repairs such as fixing a car or machinery. These expenses are in addition to the actual purchase price of an asset, so individuals and companies should be able and willing to foot the bill in order to keep their assets in running order.
Understanding Maintenance Expenses
Consumers who purchase assets should expect to pay maintenance expenses at some point in the future if they want to use them over a period of time. As mentioned earlier, these costs are incurred in order to keep an individual or company's assets in good working order.
How much an individual pays in maintenance expenses depends on the type of asset and how often upkeep is required and performed. Individuals may incur maintenance costs for homes, automobiles, appliances, and electronics, while businesses pay for maintenance on their fixed assets—vehicles, equipment, facilities—and their technology.
Keeping up to date with regular maintenance can keep costs down because the asset is serviced on a timely basis. Neglecting assets and waiting until the last minute to service them may result in higher maintenance costs. If the asset isn't maintained at all, the owner may have to replace it altogether.
Key Takeaways
- Maintenance expenses are necessary costs for upkeep—whether it's a car, home, rental apartment, or condominium.
- Neglecting regular maintenance—and not paying expenses for upkeep—may result in higher maintenance costs and, even worse, replacement costs for the asset itself.
- Individuals pay for maintenance on things like homes, automobiles, and appliances, while companies pay for upkeep on fixed assets and technology.
Special Considerations
Consumers should consider the initial price tag as well as the item's ongoing maintenance expenses when they purchase an item that requires upkeep. This is why it's always a good idea for any consumer to set some money aside for maintenance expenses. Failure to do so may result in financial distress when it comes time to pay for these charges in the future.
It's always a good idea to have money set aside for the regular maintenance of your assets.
Types of Maintenance Expenses
As mentioned above, maintenance expenses depend on the type of asset held. Maintenance expenses for homes include lawn care, plumbing, electrical, and roof repairs as well as replacement of worn-out appliances. Homeowners must also pay premiums for hazard insurance. This expense protects the owner from damage to the home from natural events like severe storms, fires, tornados, and earthquakes.
Landlords and Tenants
Most of the maintenance expenses for a rental property are the landlord's responsibility. Snow removal, sewage, trash pickup, lawn care as well as the sidewalks, windows, and any exterior expense falls to the landlord to pay. If the apartment or rental home is furnished, any replacement or repair of the furniture is the landlord’s responsibility. Cleaning or replacement of any carpeting, as well as painting, is also paid for by the landlord.
Government regulations require landlords to maintain certain safety and living standards. For example, the heat in an apartment building must meet minimum standards. The infrastructure, such as heating and ventilation, must be adequately maintained by the landlord. Some of the upkeep and maintenance may fall on the tenant. The rental agreement should define what expenses are the renter's responsibility.
Condo Fees
Monthly fees are common for people who own condominiums. Condo fees can range from $50 to $1,000 depending on the property, building, and location. If the building has a concierge, swimming pool, tennis courts, or gym, those costs are built into the monthly condo fee.
Buyers who want maintenance-free living should consider the monthly fees when calculating their affordability and the potential mortgage payment for the condominium. If, for example, the mortgage payment is $1,500 per month while the condo fee is $600 per month, the condo fee represents nearly 30% of the total monthly payments to live there.
Example of Maintenance Expenses
Owning a vehicle requires regular maintenance—oil changes, tire rotation, and engine flushes. Owners can enjoy their vehicles by keeping up to date with and paying for these expenses on a timely and regular basis. People who don't maintain their vehicles or wait too long may have to pay more in maintenance and may even have to pay the replacement cost for a new vehicle.
