Interesting approach, but I'm not sure percentage-based savings always make sense. Like, if your property's value shoots up quickly (which is happening a lot these days), suddenly you're setting aside way more cash than you realistically need for repairs. I prefer estimating based on actual expected costs—like HVAC replacement, roof lifespan, plumbing age, etc. Feels more precise, even though it does mean occasionally recalculating as things age or prices change...
I get what you're saying about percentage-based savings sometimes feeling off, especially when property values spike. I ran into something similar with a rental I bought a few years back. At first, I was setting aside a fixed percentage every month because that's what everyone seemed to recommend. But then the market went nuts, and suddenly my "repair fund" was way bigger than anything I'd realistically need—even if the roof caved in tomorrow.
Eventually, I switched to your method—estimating based on actual expected costs. It felt weirdly satisfying to sit down and map out exactly when the HVAC would likely need replacing or how many years were left on the roof. It gave me a clearer picture of what I actually needed to save, rather than just blindly stashing away cash.
But here's the thing: it wasn't perfect either. Last year, lumber prices shot up unexpectedly right when I needed some deck repairs done, and my carefully calculated estimates got blown out of the water. So now I'm kind of doing a hybrid—I still estimate based on real costs, but I also keep an extra cushion for unexpected price hikes or emergencies.
Honestly, neither approach is foolproof. Percentage-based can feel arbitrary and lead to over-saving, but detailed estimates can leave you scrambling if prices jump unexpectedly. For me, finding that middle ground has worked best—realistic estimates plus a modest buffer for surprises.
I hear you on the hybrid approach—makes sense to me. I've always leaned toward detailed estimates myself, but like you said, unexpected price jumps can really throw things off. One thing I've found helpful is revisiting my estimates every 6-12 months and adjusting for inflation or market shifts. It's a bit tedious, sure, but it keeps things realistic without tying up too much cash unnecessarily.
"One thing I've found helpful is revisiting my estimates every 6-12 months and adjusting for inflation or market shifts."
Yeah, I get where you're coming from with the regular adjustments. I've tried doing that too, but honestly, sometimes life just gets in the way and I end up pushing it off. Last year, I underestimated renovation costs on a duplex because lumber prices shot up out of nowhere... ended up eating into my cash reserves more than I'd planned. Makes me wonder if a higher down payment upfront would've saved me some headaches later on. Still figuring out the sweet spot myself...
I hear you on that lumber fiasco... got caught up in something similar myself. Honestly though, I'm pretty convinced that going with a bigger down payment upfront usually beats swallowing a higher interest rate later. Sure, it stings a bit more initially, but having lower monthly payments and more equity from the get-go can save your butt when unexpected costs pop up (and they always do, right?).
When I refinanced last year, I debated this exact issue. Ended up putting more down than originally planned and now I'm glad I did—especially with rates climbing higher lately. Plus, having lower monthly obligations just gives you more breathing room to handle market swings without panicking. It's not foolproof obviously, but personally I'd rather frontload the pain than deal with constant stress down the road. Just my two cents though... everyone's situation is different.
