How To Cope With Property Maintenance
With no exceptions, all of the properties in our portfolio have required money to be spent on ongoing property maintenance and repairs.
Those of you who have an investment property already will most likely be familiar with the sinking feeling as you get told there is some kind of maintenance issue that needs attention.
If you are using a buy and hold strategy it’s more likely you’ll start out with a newer property. This is great when you are someone who still works a full time job, long hours or simply want to be more passive with their investing.
But… as years pass, things start to breakdown, wear out and need repair and maintenance.
Although these maintenance requests can sometimes be somewhat frustrating, I want to give you some mechanisms I have used over the years of my investing that make the matter of property and building maintenance all a little easier to cope with.
Change Your Attitude
It’s easy to think that tenants break things through lack of care. But if you actually took time to stop and think about how many times you replace, repair or maintain things around your own home you’ll realize that maintenance on an investment property needs to be done on about the same frequency as you need to do these same things in your own home.
It’s true – a house that you rent to a family of adults and children may require more repairs than a property that is rented by a single adult in their senior years. But either way, things will break. They will need replacing and sometimes, the gods just decide to make things stop working for no good reason at all!
The attitude you take towards maintenance of your properties is important. What you purchase is an investment. Your investment will only continue to rise in value and keep it’s earning potential if it is kept in good condition. So look on the bright side and see your repair and maintenance as a continued investment in the value of your portfolio.
Keeping On Top Of Property Maintenance
It’s always easier to catch maintenance issues while they are in early stages rather than for them to go unnoticed until major damage occurs. It’s for this reason many investors choose to use a company that specializes in property maintenance to do a regular maintenance check.
You can give the company a copy of the Property Maintenance Checklist I have created and ask them to report back to you.
Your Property Manager should also be providing you with detailed reports on the condition of your property several times a year. Please read these reports rather than put them on the filing pile never to see the light of day again.
Track the reports and take careful notice of any items that you see slip from being listed in ‘good’ condition to ‘poor’. Stay in close contact with your Property Manager about anything that concerns you and don’t be afraid to ask for more information, photos or anything that will help you to stay on top of the condition of your property.
Using your property management reports and a house maintenance service company should see you cover every angle.
What REALLY Needs Doing?
I’ve created this Property Maintenance Checklist that will be helpful for everyone who owns an investment property and even for those living in your own home and want to keep it in a proper condition.
Content of this checklist is grouped according to different times of a year, so each section contains appropriate seasonal recommendations and tips on maintaining your investment property both indoor and outdoor.
If you find that there starts to be major items that need improving or replacing, it might get to the point where a more extensive cosmetic renovation is an option.
We have done this on a couple of our properties that were in need of a major upgrade. It’s when you decide to do the renovation that is important. The most ideal times to spend money on a cosmetic renovation are when you know you will need a bank valuation done in the near future or if you are looking to sell the property. Any time other than these can mean you are simply spending money without getting any significant return.
As an example, our property in Gamble Green is in desperate need of new carpet. The current tenant has been in there for over 5 years. He’s a tradesman who comes inside with boots on and doesn’t particularly want to have to be worried about having new carpet to take care of. We could not get a significant increase in rent for the property for the expense so for the moment; we’ll keep our money in the bank.
As a landlord it’s vital you also maintain certain safety standards. Examples of this are to have fire alarms fitted and working; safety switches that work, security screens on doors and windows etc.
Who’s Going To Do The Work???
If you’re great on the tools yourself you can save a lot of money doing property maintenance yourself. That is great – if you have the time and live nearby. In our case, most of our properties are either 4-5 hours away, or in other States of Australia so this is not an option. Plus my husband is a lousy handyman (but I still love him to bits ). So most of the time it’s going to be a matter of letting the experts do their job while you get on with doing yours.
Your Property Manager or building maintenance company can source and manage reliable tradies to do repair and maintenance work for you. If you are self managing a property (which I don’t recommend), there are lots of online quoting websites tradies use now like http://www.tradeezi.com.au/ and http://www.quote-trade-service.com.au/ where you can seek out someone in the area of the property to do the work for you.
Keep a record of all your expenses relating to property maintenance. It’s likely all of these can be claimed as a tax deduction but your accountant will make that formal decision for you.
How To Manage The Cost Of Ongoing Property Maintenance
I would like to think you always have a small amount of funds set aside for unexpected expenses relating to your properties. Allocating even a small amount each week will ease the burden of paying for a regular maintenance plan. It’s easier to fund small repairs but this won’t mean there will be random acts of replacement necessary…. you don’t’ usually get much notice when the water heater decides to blow up!
We have a Line of Credit set up specifically for this purpose. Let’s say it costs $1,000 for a new oven. We pay this from our line of credit, so we are charged interest on the $1000 @5% = $50 per annum. That $50 is a tax deductible expense against the income from our properties. So the real cost to buy the new oven is in fact very little.
In my experience the areas requiring the most constant expenditure are hot water systems, toilet cisterns and ovens.
How to manage the ongoing property maintenance can be a big fear for newer investors but in the big picture of investing, it’s simply one of the learning curves that you will go through. There are always people you can call on for support and advice if you need it.
The benefits of maintaining a valuable piece of real estate far out way any concerns with small amount of expense required for property maintenance to keep your asset in good condition and highly attractive for tenants.
What tips or challenges would you add for managing property maintenance?