A maintenance reserve is the planned operating budget allocation for routine and preventive maintenance. Distinct from capital reserves (major replacements). Typical LA multifamily: $400–$800 per unit per year.
Maintenance reserves cover routine repairs, preventive maintenance (HVAC service, annual inspections), common-area upkeep, and normal wear-and-tear. Calculated per unit per year; varies by building age, climate exposure, and amenity level.
LA multifamily operating statements should include maintenance reserves as a normal operating line. Sellers who exclude them overstate NOI. Buyer underwriting typically adds maintenance reserves to the seller's stated numbers if they're missing or understated.
From the Sterman LA Multifamily Glossary — defined the way a broker with $1.41 billion across 254 closed transactions actually uses these terms.
Michael Sterman, Senior Managing Director Investments, Marcus & Millichap.
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