Expensive repair on rental. Should I do it?

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Expensive repair on rental. Should I do it?

Supada L.
New to Real Estate · Member since 2020 · 147 posts · 134 votes

Hello,

I have an out-of-state rental that I've relied on the property management to take care of it. I have owned the property for about a year and there has been minor fixes that already turned my first year cashflow negative.

Earlier this year the tenant has submitted a repair request for the drive way as shown in the pictures below. My PM got a quote for $5500 to repair it. Should I let them do it? Or is there a way to mitigate the cost? Any suggestions are welcome.

Thank you in advance,
Supada

The tenant complain: "Driveway pavement is coming up & it is tearing up the front end of my cars!"

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Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
5y
Originally posted by @Supada L.:

I have an out-of-state rental that I've relied on the property management to take care of it. I have owned the property for about a year and there has been minor fixes that already turned my first year cashflow negative.

This is the lesson here.  OOS managed rentals can't cash-flow when the Maytag Man needs to be called for every little thing.  Period.

OOS 'passive' rental ownership should be more of a wealth preservation strategy rather than accumulation needing cash-flow strategy.  There will always be minor fixes. 

Yep, definitely replace that driveway with concrete.  Need to think long-term👍

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  • Supada L.
    OP
    New to Real Estate · Member since 2020 · 147 posts · 134 votes
    5y
    Originally posted by @Justin R.:
    Originally posted by @Steve Vaughan:
    Originally posted by @Supada L.:

    I have an out-of-state rental that I've relied on the property management to take care of it. I have owned the property for about a year and there has been minor fixes that already turned my first year cashflow negative.

    This is the lesson here.  OOS managed rentals can't cash-flow when the Maytag Man needs to be called for every little thing.  Period.

    OOS 'passive' rental ownership should be more of a wealth preservation strategy rather than accumulation needing cash-flow strategy.  There will always be minor fixes. 

    Yep, definitely replace that driveway with concrete.  Need to think long-term👍

    I wish I could upvote this 20 times, and make this thread required reading for every single person who considers this approach to investing.  It's educational. 

    Yep. Lesson learned. Thank you. 

    1Reply
  • Michael Plante
    Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes
    5y

    Was bad when you bought it 

    no way tenant is tearing up their car unless they are racing over it 

    There are worse public streets than this can’t see liability lawsuit being successful 

    Have the concrete put in a dump truck. Sell it to a concrete recycling plant.   (google it) While the dump truck is there have them get 10 tons of recycle concrete  

    total cost maybe $1000

    No way $5500 will pay for a quality concrete or black top driveway which will weather the freeZe and thaw in Mississippi 

    4Reply
  • Bart Mastin
    Member since 2018 · 4 posts · 9 votes
    5y

    I had a similar problem. Mine was caused by tree roots. I thought the prices for replacement and partial replacement were outrageous. It looks like you don't have any tree roots to worry about. I hired a hardscape/landscape guy. He pulled out the driveway pieces that wobbled a lot when driven over and put crusher run gravel in voids. I think I had him put landscape fabric down before he put in the gravel to stop weeds from growing up thru the gravel. The crusher run gravel is a mix of powder and gravel and compacts well when you drive over it to help keep water out. He may have also put some #57 gravel in there too but I don't remember. The guy you hire should know what will work best. Have the hardscape guy drive over it while he is putting it down so it will compress and he can add more if necessary. I put river gravel over the top for cosmetics but that gets caught in tire tread so you probably don't want to do that.

    On the really big pieces where there was a raised edge(similar to the break closer to your carport), I took an angle grinder with a diamond blade and smoothed out the edge. This eliminated the trip hazard and made it smoother for car to drive over. You could probably hire a handyman to do this.

    Lessons learned: I would have probably left some of the bigger pieces that were removed even if they wobbled a little when driven over.

    The hardscape guy had never done anything like this so we did not know if it would work. We were pleased with the results when I test drove over it and there have not been any complaints about it from the new tenants. You may have to explain to your hardscape guy what you want done, but they have all the necessary equipment and don't charge as much as "driveway experts".

    The crusher run gravel will probably have to be replenished every couple of years.

    My quotes were $5K minimum for driveway repair also and the hardscape guy charged me $650.00 and that included some dirt and grading work around the house.

    Hope this helps. -bart

    1Reply
  • Curt Smith
    Rental Property Investor · Clarkston, GA · Member since 2012 · 2k+ posts · 1k+ votes
    5y

    @Supada L. A few of my driveways are like that. And I leave them

    That tenant is bucking to be let out if the lease. I'd send the tenant a; you are free to leave in 60 days. Not mention the drive.

    Next lease must have a clause: I accept the property as it currently exists.

    Those cracks aren't the risk in my view as others are saying.

    What's not said is your folly of buying a huge investment without seeing with your own eyeballs!

    I bet if yiu do a postmodern on this deal you'd be better off putting your cash into the stock market Etf Spy. You might do this investigation?

    2Reply
  • Lane Aakhus
    Investor · Honolulu, HI · Member since 2019 · 47 posts · 25 votes
    5y

    @Chinyere Orie. Agreed! At a minimum you should be able to get a complete refund on the inspection fee. No inspector wants a poor Yelp review.

    1Reply
  • Nathan James Smithee
    New to Real Estate · Saint Louis, MO · Member since 2021 · 9 posts · 2 votes
    5y

    @Supada L. I used to do residential concrete myself. Mostly driveways and breezeways. $5500 is a good deal. Get a couple more bids, but the cheapest bid with concrete isn't always the cheapest route.

    0Reply
  • Tushar P.
    Member since 2019 · 332 posts · 171 votes
    5y
    Originally posted by @Curt Smith:

    I bet if yiu do a postmodern on this deal you'd be better off putting your cash into the stock market Etf Spy. You might do this investigation?

    I’m also wondering what is the aim of such investments. Spending an hour to scan other people’s experiences would have revealed that a rental is not a passive investment (even when sourced from turnkey operators who continue as PM). More so in a location that relies on cash flow and will hardly have any inflation-adjusted appreciation. I have always wondered if such investments are made by someone who is retired, has lots of time and money, and is looking for a hobby to keep occupied? But of course I started wondering that only after I scanned the posts for other people’s experiences and realized what investing in rentals can lead to.

    1Reply
  • Supada L.
    OP
    New to Real Estate · Member since 2020 · 147 posts · 134 votes
    5y
    Originally posted by @Michael Plante:

    Was bad when you bought it 

    no way tenant is tearing up their car unless they are racing over it 

    There are worse public streets than this can’t see liability lawsuit being successful 

    Have the concrete put in a dump truck. Sell it to a concrete recycling plant.   (google it) While the dump truck is there have them get 10 tons of recycle concrete  

    total cost maybe $1000

    No way $5500 will pay for a quality concrete or black top driveway which will weather the freeZe and thaw in Mississippi 

    Sounds like a good option. I'll google it. Thank you so much. 

    0Reply
  • Michael Plante
    Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes
    5y
    Originally posted by @Curt Smith:

    @Supada L. A few of my driveways are like that. And I leave them

    That tenant is bucking to be let out if the lease. I'd send the tenant a; you are free to leave in 60 days. Not mention the drive.

    Next lease must have a clause: I accept the property as it currently exists.

    Those cracks aren't the risk in my view as others are saying.

    What's not said is your folly of buying a huge investment without seeing with your own eyeballs!

    I bet if yiu do a postmodern on this deal you'd be better off putting your cash into the stock market Etf Spy. You might do this investigation?

     Fantastic reply!


    except IMO the last part 

    1Reply
  • Supada L.
    OP
    New to Real Estate · Member since 2020 · 147 posts · 134 votes
    5y
    Originally posted by @Bart Mastin:

    I had a similar problem. Mine was caused by tree roots. I thought the prices for replacement and partial replacement were outrageous. It looks like you don't have any tree roots to worry about. I hired a hardscape/landscape guy. He pulled out the driveway pieces that wobbled a lot when driven over and put crusher run gravel in voids. I think I had him put landscape fabric down before he put in the gravel to stop weeds from growing up thru the gravel. The crusher run gravel is a mix of powder and gravel and compacts well when you drive over it to help keep water out. He may have also put some #57 gravel in there too but I don't remember. The guy you hire should know what will work best. Have the hardscape guy drive over it while he is putting it down so it will compress and he can add more if necessary. I put river gravel over the top for cosmetics but that gets caught in tire tread so you probably don't want to do that.

    On the really big pieces where there was a raised edge(similar to the break closer to your carport), I took an angle grinder with a diamond blade and smoothed out the edge. This eliminated the trip hazard and made it smoother for car to drive over. You could probably hire a handyman to do this.

    Lessons learned: I would have probably left some of the bigger pieces that were removed even if they wobbled a little when driven over.

    The hardscape guy had never done anything like this so we did not know if it would work. We were pleased with the results when I test drove over it and there have not been any complaints about it from the new tenants. You may have to explain to your hardscape guy what you want done, but they have all the necessary equipment and don't charge as much as "driveway experts".

    The crusher run gravel will probably have to be replenished every couple of years.

    My quotes were $5K minimum for driveway repair also and the hardscape guy charged me $650.00 and that included some dirt and grading work around the house.

    Hope this helps. -bart

    Thank you for taking your time to relate your experience. This is very helpful. I will find a hardscape guy to look at this issue. Thank you so much.

    1Reply
  • Curt Smith
    Rental Property Investor · Clarkston, GA · Member since 2012 · 2k+ posts · 1k+ votes
    5y

    @Michael Plante  Thanks,  for my info and learning, what was your disagreeing with my post part?  About buying turn key OOS sight unseen?  Or that putting the same cash into the stock market may have out performed?  :)

    I'm a stock market phobe, and marginally competent. Yet have a giant amount of cash parked in the stock market. ;( Have taken good education from a REI guy who also is good in the stock market show that; REI with full leverage (a mortgage) including appreciation, debt paydown, rent appreciation out performs the stock market (ave over many years of 13%) by 2x easy. BUT this OP's saying negative cash flow 1st year, and typically over paying for the asset so prob no appreciation, that buying SPY may have out performed. I just wanted folks to think about REI critically and comparitively and not assume that buying any crapy rental will be a great investment. :)

    To all;  a help with your buy and hold business model is captured in a paper I wrote and linked off my BP profile 1st paragraph;  how to buy a bullet proof portfolio..  Best to all especially the turn key buyers out there.

    1Reply
  • Supada L.
    OP
    New to Real Estate · Member since 2020 · 147 posts · 134 votes
    5y
    Originally posted by @Curt Smith:

    @Supada L. A few of my driveways are like that. And I leave them

    That tenant is bucking to be let out if the lease. I'd send the tenant a; you are free to leave in 60 days. Not mention the drive.

    Next lease must have a clause: I accept the property as it currently exists.

    Those cracks aren't the risk in my view as others are saying.

    What's not said is your folly of buying a huge investment without seeing with your own eyeballs!

    I bet if yiu do a postmodern on this deal you'd be better off putting your cash into the stock market Etf Spy. You might do this investigation?

    Totally agreed with those points. Lessons learned. 

    0Reply
  • Supada L.
    OP
    New to Real Estate · Member since 2020 · 147 posts · 134 votes
    5y
    Originally posted by @Nathan James Smithee:

    @Supada L. I used to do residential concrete myself. Mostly driveways and breezeways. $5500 is a good deal. Get a couple more bids, but the cheapest bid with concrete isn't always the cheapest route.

    Thank you. I'm looking for other contractors and alternative options as well.

    1Reply
  • Account Closed
    Specialist · Philadelphia, PA · Member since 2018 · 26 posts · 26 votes
    5y

    @Supada L.

    Since it is a rental property, you should think of the longevity of any work you will have done. With concrete driveways, it's possible for the concrete to shift or sink if the base isn't laid properly. Removing it and replacing with asphalt is a better alternative as replacing the concrete will probably lead to similar repairs over time. Asphalt is more cost-effective and requires less maintenance in the long run.

    2Reply
  • Supada L.
    OP
    New to Real Estate · Member since 2020 · 147 posts · 134 votes
    5y
    Originally posted by @Account Closed:

    @Supada L.

    Since it is a rental property, you should think of the longevity of any work you will have done. With concrete driveways, it's possible for the concrete to shift or sink if the base isn't laid properly. Removing it and replacing with asphalt is a better alternative as replacing the concrete will probably lead to similar repairs over time. Asphalt is more cost-effective and requires less maintenance in the long run.

    Thank you for your suggestion. Would asphalt turn sticky in the heat of Mississippi? 

    1Reply
  • Account Closed
    Specialist · Philadelphia, PA · Member since 2018 · 26 posts · 26 votes
    5y

    @Supada L.

    That's a great point and important to consider when deciding which route to take. High heat will most likely cause it to soften. I'm based in PA and typically do not have to worry about the asphalt tracking. Definitely worth mentioning to your PM if they get quoted for an asphalt driveway.

    1Reply
  • Supada L.
    OP
    New to Real Estate · Member since 2020 · 147 posts · 134 votes
    5y
    Originally posted by @Account Closed:

    @Supada L.

    That's a great point and important to consider when deciding which route to take. High heat will most likely cause it to soften. I'm based in PA and typically do not have to worry about the asphalt tracking. Definitely worth mentioning to your PM if they get quoted for an asphalt driveway.

    Thank you! The quote they gave me was for concrete. From googling, asphalt would be half the price. I also used google map to look at the neighborhood. It looks like their driveways are all concrete. Anyway, gotta dig deeper.

    1Reply
  • Ramkumar S.
    Rental Property Investor · CA · Member since 2018 · 12 posts · 3 votes
    5y

    @Supada L. Won’t your insurance cover this expense ?

    1Reply
  • Allen L.
    Rental Property Investor · Chicago and mainly invests in KS remotely · Member since 2018 · 360 posts · 314 votes
    5y

    Demo the driveway and put in gravel, or get a better bid. I did a brand new driveway and sidewalk for about 2.2K, didn't need to demo though but your bid looks very expensive. You need to get 3-4 bids though. The tenant can't complain if it's gravel, and there's no liability, just spend 300 dollars every 7 years putting on more gravel, that's it. 

    1Reply
  • Mary M.
    Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    5y

    My comment is that gravel may be a cheaper option, but gravel tracks and it will get on shoes etc and will track into the house and get all over the floors.....   I personally would not put in a gravel drive in a urban/suburban rental  just for this reason. 

    2Reply
  • Allen McGlashing
    Investor · Cambridge, MA · Member since 2017 · 195 posts · 106 votes
    5y

    @Supada L. My response to fixing the driveway; that is something that absolutely needs to be done. I would look into asphalt that is usually a cheaper option and lasts. The bigger concern I had with your comment is the PM has turned your cash flow negative due to minor repairs. Are you getting notified when a repair is requested? I also would put in every lease agreement that there is a $100 deposit every time a specialty contractor is called. This makes your tenant think twice about calling and requesting very minor things.

    1Reply
  • Shane H.
    Member since 2018 · 433 posts · 208 votes
    5y

    I wish my driveway were half this nice... We live in different worlds!

    1Reply
  • Supada L.
    OP
    New to Real Estate · Member since 2020 · 147 posts · 134 votes
    5y
    Originally posted by @Ramkumar S.:

    @Supada L. Won’t your insurance cover this expense ?

    Thank you. I haven't asked them, but it's not mentioned in the document I have. I'll call them tomorrow thought. 

    1Reply
  • Supada L.
    OP
    New to Real Estate · Member since 2020 · 147 posts · 134 votes
    5y
    Originally posted by @Allen L.:

    Demo the driveway and put in gravel, or get a better bid. I did a brand new driveway and sidewalk for about 2.2K, didn't need to demo though but your bid looks very expensive. You need to get 3-4 bids though. The tenant can't complain if it's gravel, and there's no liability, just spend 300 dollars every 7 years putting on more gravel, that's it. 

    Thank you. That's a good option. 

    1Reply
  • Supada L.
    OP
    New to Real Estate · Member since 2020 · 147 posts · 134 votes
    5y
    Originally posted by @Mary M.:

    My comment is that gravel may be a cheaper option, but gravel tracks and it will get on shoes etc and will track into the house and get all over the floors.....   I personally would not put in a gravel drive in a urban/suburban rental  just for this reason. 

    Thank you. I'll keep that in mind as well. 

    1Reply
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