HI BP,

I’m a relatively new investor (have 2 units/ under contract on 6 units) and wanted to survey those seasoned landlords out there:

1. When checking out a Buy/Hold property, what are your “deal breakers” that you avoid? (For me, anything more than light rehab, I don’t have the stomach/experience for yet.)
2. For interior, minor maintenance items, do you let it go or do until tenant turnover or do you knock it out as soon as you take possession? (Loose handrail; chipped linoleum, trim damage, etc)
3. What’s your method for determining fix now or fix later? (I’ve heard some say if it has less than 5 years life, take care of it.)

Thanks in advance!

Mike German

Originally posted by @Mike German :

HI BP,

I’m a relatively new investor (have 2 units/ under contract on 6 units) and wanted to survey those seasoned landlords out there:

1. When checking out a Buy/Hold property, what are your “deal breakers” that you avoid? (For me, anything more than light rehab, I don’t have the stomach/experience for yet.)
2. For interior, minor maintenance items, do you let it go or do until tenant turnover or do you knock it out as soon as you take possession? (Loose handrail; chipped linoleum, trim damage, etc)
3. What’s your method for determining fix now or fix later? (I’ve heard some say if it has less than 5 years life, take care of it.)

Thanks in advance!

Mike German

 Anything interior that is cosmetic in nature you just want to let it go until turnover. Things you want to fix right away are potential issues that could be considered a safety hazard or lead to further damage such as plumbing leaks, roof issues, electrical, HVAC etc. 

1) None. Make sure your purchase price leaves room for any needed repairs. I almost always prefer to be responsible for the repairs, to have them done the way I want. For example, we bought a duplex that had a pest inspection come back with several thousand dollars of suggested repairs. The seller gave us a discount and we hired a handyman to fix the important stuff for a few hundred bucks. Win!

2) Generally let it wait until turnover. I like to fix everything that might need it at turnover and err on the side of overdoing it to help attract better tenants. I've heard some advise to go fix one or two little things when you buy to make you seem like a nice guy. That seems reasonable, but I haven't done it yet.

3) Fix if it doesn't work (broken disposal), has a risk of further damage (leaky plumbing), or is a habitability issue (mold). Otherwise, the default answer is no, but in reality is negotiable and I'm willing to deal with some nonessential repairs to keep tenants happy (blinds aren't working well).

Thanks @James Wise !  I’m planning to do some exterior grading after we close to alleviate some basement water issues.

Thanks @Jeremy Brown ! Simple,

Straight-forward approach!

I have no deal breakers at all, as long as the price and value work for me.

That said, I look for at least most of the mechanicals to be updated within a recent period.  Roof, HVAC, plumbing, Elec service and panel, etc.

I prefer if a few other things have been done that will ensure happier tenants.  

And while I'll happily do anything based on value, there are a few things it's just not worth getting into for me (time-wise) as properties are abundant for us.

I won't spend time on a major foundation repair on a rental.  Or basement water intrusion issues if they are more than sealing a minor crack.  I won't install french drains or interior curtain drains.  Stuff like that.  Too easy to find properties without these issues.  

No asbestos or lead paint issues inside or out.  

We buy only B/A class homes, typically nicer inventory, so most of our homes never have these issues anyway.  

Best of luck!  

Great stuff, @Bryan Blankenship !