3 Maintenance issues in 7 months on 'turnkey' house

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3 Maintenance issues in 7 months on 'turnkey' house

Natalia Avalos
New to Real Estate 路 San Francisco, CA 路 Member since 2018 路 13 posts 路 5 votes

Hi folks,

I bought my first house in October and it was supposed to be 'turnkey.' At this point, I'm up to 3 maintenance issues, totaling roughly $300 altogether. The first was a broken closet door, the second was a hot water issue that cost me $200 and now apparently there was no mailbox flap so I'm being charged $45 for a replacement. None of these issues were surfaced during the inspection. I am remote, and therefore did not go myself to inspect the property so expected some issues periodically but this seems a little ridiculous.

I need a gut check on if this is 'normal' for older rehabbed properties and just sucks, or if I'm getting screwed in some way and need to reach back out to the seller or work with my PM. Any help/advice would be welcome.

thank you,

Natalia 

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Nathan GesnerBusiness Member
Moderator
Real Estate Broker 路 Cody, WY 路 Member since 2010 路 28k+ posts 路 41k+ votes
7y

This sounds completely reasonable. When companies renovate a home and sell it turn-key, that doesn't mean they've baked cookies in the oven, taken a 15-minute shower, or attempted to check the mail. The three things you've mentioned could easily be overlooked by any inspector. The hot water heater could be a new problem that developed after you purchased (bad dip tube, failing pressure relief valve, etc.)

I think you're doing well. 

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  • Ryan B.
    Investor 路 Indianapolis, IN 路 Member since 2015 路 126 posts 路 141 votes
    7y

    This seems normal to me.  To me, "turnkey," doesn't mean warranted to be maintenance free.  If the mailbox had a flap at the start of a tenancy, and it disappeared, under my lease, that would be charged to the tenant (potentially the same for the broken closet door.. but the description is too generic to understand if it wore out or if it was abused).

    9Reply
  • Account Closed
    Rental Property Investor 路 Brooke Park Drive 路 Member since 2018 路 1k+ posts 路 2k+ votes
    7y

    Assuming the rent is 750 and you put away 5% for maintenance 750 x 5% x 12 months is 450 for the year and you have used 300 in 7 months.  Does not sound to outrageous.

    10Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker 路 Cody, WY 路 Member since 2010 路 28k+ posts 路 41k+ votes
    7y

    This sounds completely reasonable. When companies renovate a home and sell it turn-key, that doesn't mean they've baked cookies in the oven, taken a 15-minute shower, or attempted to check the mail. The three things you've mentioned could easily be overlooked by any inspector. The hot water heater could be a new problem that developed after you purchased (bad dip tube, failing pressure relief valve, etc.)

    I think you're doing well. 

    The DIY Landlord Book4.7247 Reviews
    WebsiteView Page
    13Reply
  • James Wise
    Real Estate Broker 路 Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH 路 Member since 2013 路 31k+ posts 路 20k+ votes
    7y
    Originally posted by @Natalia Avalos:

    Hi folks,

    I bought my first house in October and it was supposed to be 'turnkey.' At this point, I'm up to 3 maintenance issues, totaling roughly $300 altogether. The first was a broken closet door, the second was a hot water issue that cost me $200 and now apparently there was no mailbox flap so I'm being charged $45 for a replacement. None of these issues were surfaced during the inspection. I am remote, and therefore did not go myself to inspect the property so expected some issues periodically but this seems a little ridiculous.

    I need a gut check on if this is 'normal' for older rehabbed properties and just sucks, or if I'm getting screwed in some way and need to reach back out to the seller or work with my PM. Any help/advice would be welcome.

    thank you,

    Natalia 

     Turnkey is a marketing term, nothing more. You got an inspection on the property prior to closing. At that point you were able to see the exact condition of the home you were buying. I assume as you've since purchased it you were happy with what you saw. At that time there was not a mailbox issue, hot water tank issue or mailbox issue. Since that time these 3 items became an issue & your PM fixed them. This is what happens when you own rental real estate. Welcome to the party.

    7Reply
  • David Greiner
    Rental Property Investor 路 Ann Arbor MI 路 Member since 2018 路 58 posts 路 43 votes
    7y

    Maintaining properties isnt cheap. Cost of doing business.

    3Reply
  • Andrew Cornstubble
    Rental Property Investor 路 Sedan, KS 路 Member since 2016 路 125 posts 路 92 votes
    7y

    @Natalia Avalos

    I was under my rental house 3 times yesterday to fix a water leak. Older properties are cheap for a reason.

    Believe me, I'm really not a fan of crawling around under a house so low that I have to take a fold up shovel with me to dig paths under the floor joists. Especially after working 10 hours at my 50+ hour a week day job.

    I for sure couldn't make any money doing this remotely with a plumber or pm. But i can assure you this isn't going to be the end.

    10Reply
  • Matt P.
    Investor 路 Columbus, OH 路 Member since 2015 路 625 posts 路 601 votes
    7y

    @Andrew Cornstubble Haha you sound like me. Sometimes all I can do is laugh at the crazy situations I get myself into while rehabbing and self manageing 100 year old properties.

    4Reply
  • Frank Geiger
    Rental Property Investor 路 NC 路 Member since 2018 路 776 posts 路 776 votes
    7y

    Broken Closet Door (Tenant), Mailbox Flap (Could be anyone). These two issues are expected and not a big deal. I know you don't want to lose any money but properties will have normal expenses like these. I would charge the tenant for the door upon move out.

    When you purchase turnkey, you need to make sure they replace mechanicals. It needs all new CAPEX items if over x years old. That's a huge issue investors run into with turnkey.

    3Reply
  • Tom Ott
    Equity Raiser and Turnkey Provider 路 Cleveland, OH 路 Member since 2016 路 4k+ posts 路 1k+ votes
    7y
    Originally posted by @Natalia Avalos:

    Hi folks,

    I bought my first house in October and it was supposed to be 'turnkey.' At this point, I'm up to 3 maintenance issues, totaling roughly $300 altogether. The first was a broken closet door, the second was a hot water issue that cost me $200 and now apparently there was no mailbox flap so I'm being charged $45 for a replacement. None of these issues were surfaced during the inspection. I am remote, and therefore did not go myself to inspect the property so expected some issues periodically but this seems a little ridiculous.

    I need a gut check on if this is 'normal' for older rehabbed properties and just sucks, or if I'm getting screwed in some way and need to reach back out to the seller or work with my PM. Any help/advice would be welcome.

    thank you,

    Natalia 

    Luckily they all sound small. Was this a TRUE Turnkey? By that I mean, did you buy it from a provider who 1) owned it first 2) renovated it in-house 3) still manages it for you after you purchased it? If not, they may have just used the word "turnkey" to get your attention.

    Most Turnkey providers offer a home warranty if they did the work in-house. Do they not offer that?

    2Reply
  • Natalia Avalos
    OP
    New to Real Estate 路 San Francisco, CA 路 Member since 2018 路 13 posts 路 5 votes
    7y

    Thanks everyone for your comments! I love having this community so I can get some additional perspective from other folks who have been doing this longer than me. All are valid points and I'll keep them in mind for the future. 

    2Reply
  • Michael Noto
    Real Estate Agent 路 Southington, CT 路 Member since 2008 路 5k+ posts 路 3k+ votes
    7y

    @Natalia Avalos These kinds of things happen when you own rentals. Nothing you mentioned is abnormal. $300 in repairs in 7 months is a drop in the bucket. Doesn't sound like rentals are for you, which is OK. Sometimes expectations don't match reality with all kinds of investments.

    4Reply
  • Bob Prisco
    Specialist 路 Cleveland, OH 路 Member since 2018 路 1k+ posts 路 666 votes
    7y

    @Natalia Avalos lets keep in in prospective, its $300 NOT 3k,  also in your pro forma you should have about 5% for maintenance , so this is a none issue :)  If you only spend $300 per year, shhhhhhhh do not complain, your doing well. 

    6Reply
  • Bryan Blankenship
    Investor 路 Cincinnati, OH 路 Member since 2014 路 538 posts 路 432 votes
    7y

    @Natalia Avalos What everyone has said is true and pretty standard! Figure in about 5% annually for repairs/maintenance. Houses are lived in, houses are used daily. Things will break, tear, and fail from repetitive, daily use eventually. Generally those things happen more often in your C and D Class properties, so costs are higher there long-term.

    3Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor 路 Sioux Falls, SD 路 Member since 2015 路 9k+ posts 路 18k+ votes
    7y

    @Natalia Avalos I have owned two new homes and within the first year both had multiple issues. The reason I am mentioning this is to illustrate that even new items can have issues.

    A broken closet door could be something as simple as the door falling of it's track. That has happened in almost every rental house I have owned. 

    I am not sure what the hot water issue would be. I would get more detail on exactly what broke. I have had tenants call with "no hot water" and it was a pilot light out. I just went and fixed it, but a PM company may have a plumber go out, so a five minute fix gets trip charge and minimum labor charge, so turns into $200. Assuming the water heater was replaced during renovation, that could be a warranty item. 

    The mail box, pretty much $45 is a new one. Mail box flaps don't just fall off so it was either really old or vandalized. Not much you can do on that one.

    Home inspections are a good idea but I have seen inspectors miss obvious things or just don't check certain things. You are lucky this isn't a collapsed sewer main or something similar that costs thousands to fix. 

    3Reply
  • Jonathan Oh
    Investor 路 Las Vegas, NV 路 Member since 2019 路 499 posts 路 259 votes
    7y

    @Natalia Avalos Not a big issue at all! This is why it is important to set aside reserves. You will run into issues like this whether it's turnkey or not. Expect more of these moving forward.

    1Reply
  • Ernesto Hernandez
    Realtor 路 San Francisco, CA 路 Member since 2017 路 408 posts 路 361 votes
    7y

    Assuming your monthly rent is $900 and you are saving 5% a month as you should for maintenance like this, that puts you at $540 a year. You're trending $514 over the course of this year. 

    You're fine.

    1Reply
  • Ali Boone
    Real Estate Coach 路 Venice Beach, CA 路 Member since 2012 路 6k+ posts 路 3k+ votes
    7y

    I'm a little late to the thread, but as one other person asked-- did you get a warranty from the seller? Usually the turnkey providers will offer a 12-month scope-of-work warranty. So if anything goes wrong repair-wise that should've been something covered in the rehab, they'll cover it. All 3 of those things sound like they would fall into that category. If you worked with a turnkey provider who doesn't offer that, that sounds sketchy because I've never heard of a good one who doesn't.

    Outside of all that, yep, cost of doing rentals.

    But for you, that should go under the scope-of-work. Did you ask the seller about them? Or anyone involved?

    1Reply
  • Jonathan W.
    Los Angeles, CA 路 Member since 2019 路 512 posts 路 301 votes
    7y

    @Natalia Avalos it could be worse...

    1Reply
  • Caleb Heimsoth
    Rental Property Investor 路 Durham, NC 路 Member since 2016 路 7k+ posts 路 7k+ votes
    7y

    @Natalia Avalos. What market is this in?

    0Reply
  • Jason JamesPro Member
    Rental Property Investor 路 Hillsboro, OR 路 Member since 2018 路 117 posts 路 64 votes
    7y

    @Natalia Avalos nothing to worry about as these are not major issues. As long as you factored maintenance into monthly expenses ( normally 5%) you鈥檒l be okay. It鈥檚 a part of owning rentals .

    1Reply
  • Account Closed
    Rental Property Investor 路 Windermere, FL 路 Member since 2019 路 16 posts 路 2 votes
    7y

    @Natalia Avalos

    Something in regards to small maintenance issues... We write into our leases that any issue/repair under $150 is tenant responsibility. It鈥檚 subjective but helps field some of the small stuff.

    0Reply
  • Steve K.
    Realtor 路 Boulder, CO 路 Member since 2016 路 3k+ posts 路 5k+ votes
    7y
    Originally posted by @Natalia Avalos:

    Hi folks,

    I bought my first house in October and it was supposed to be 'turnkey.' At this point, I'm up to 3 maintenance issues, totaling roughly $300 altogether. The first was a broken closet door, the second was a hot water issue that cost me $200 and now apparently there was no mailbox flap so I'm being charged $45 for a replacement. None of these issues were surfaced during the inspection. I am remote, and therefore did not go myself to inspect the property so expected some issues periodically but this seems a little ridiculous.

    I need a gut check on if this is 'normal' for older rehabbed properties and just sucks, or if I'm getting screwed in some way and need to reach back out to the seller or work with my PM. Any help/advice would be welcome.

    thank you,

    Natalia 

     $300 over 8 months for maintenance and repairs is great! Very minimal as far as keeping up a property goes. You're lucky you haven't had any major expenses yet. 

    1Reply
  • Steve K.
    Realtor 路 Boulder, CO 路 Member since 2016 路 3k+ posts 路 5k+ votes
    7y
    Originally posted by @Account Closed:

    @Natalia Avalos

    Something in regards to small maintenance issues... We write into our leases that any issue/repair under $150 is tenant responsibility. It鈥檚 subjective but helps field some of the small stuff.

     I don't recommend doing this, as most tenants will simply not tell you about or not perform necessary repairs if they have to pay, and then you end up with bigger problems due to things not being repaired promptly and properly then escalating. Never allow tenants to get involved with repairs, they will screw it up worse every time. Most tenants aren't even capable of determining what is a $150 repair, and do not want to spend money repairing a property they don't own. Most have not owned or cared for a property so typically have very little expertise when it comes to repairs. They are highly likely to perform an atrocious repair or just cover it up to avoid being charged $150, so I encourage them to report everything immediately in order to have it fixed by someone who knows what they're doing before it gets worse and more expensive.  

    5Reply
  • Matt K.
    Walnut Creek, CA 路 Member since 2015 路 3k+ posts 路 2k+ votes
    7y

    Wait till you have tree trimming or worse yet tree removal.  Or drain unclogged from rootball after hours... These will make you wish they were only 300.

    But things will come up, tons of small problems always getting fixed would most likely be prop manager trying to make some extra money, but this would be every single month. Doesn't sound like the case ...yet.

    Bad rehab is going to something major... But something like this should of been seen in an appraisal and inspection. 

    I'd move away from fixed percentage as for your operating fund... Move to an actual dollar amount. Everything has a lifespan and a cost. I'd inventory what you have and how old the are then you can balance that against how long you want to keep property. This will help you know when someone is trying to take advantage of you but more importantly the quality of your asset.

    1Reply
  • Michael Gansberg
    Investor 路 New York City, NY 路 Member since 2015 路 388 posts 路 563 votes
    7y

    @Natalia Avalos - I think you're doing fine. These two pictures popped up via a text from management this AM, followed by, "Call me."

    We were cutting a hole in the roof to provide roof access for a company installing a TPO(thermoplastic olefin) roof(that's gonna cost $20k.) When cutting the hole, we found that there'd been a fire in the past and a prior owner put in structural supports under the roof, so we won't be able to provide roof access to the roofing company and they'll have to use ladders. So with some hard work and good luck, you may graduate to the kind of expenses I see on a daily basis 馃槃

    0Reply
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