I remember the auto parts commercial stating that you could prevent a costly engine replacement by simply changing the oil and filter on a regular basis. The tagline was “You can pay me now, or you can pay me later.” That certainly applies to real estate. Performing preventative maintenance on a regular basis can help you avoid expensive repairs on your rental properties.
Hopefully every landlord understands the importance of having a reserve fund to handle vacancies and repairs. The fund should be sufficient to handle major items that will eventually need replacement, such as a roof or furnace. Having a fund does not mean you have to spend it. Preventative maintenance to prolong the life of big ticket items will also extend the life of your reserve fund and ultimately boost your bottom line.
Take advantage of Opportunities
I recently had a vacancy in one of my rentals. I had a three week window of opportunity from the time the old tenant left and the new one moved in. I performed the usual make ready tasks such as cleaning the carpets and applying fresh paint. I also performed a series of system checks as I always do. Several minor problems were uncovered that could have resulted in costly repairs if left uncorrected.
I had a service technician inspect the furnace and water heater. The furnace was in great shape but the water heater needed a little work. Had the repair not been made there was a high probability that the heater would have failed. Another problem that could have easily been overlooked was a leaking tub surround. Making these repairs cost less than $300. Had I overlooked them the resulting bill could have been $600 for the water heater and the repair costs for the leak might have been in the thousands.
Create a Checklist
Much like a pilot uses a checklist even though he may have logged thousands of hours flying, you should use one as well. A list is easy to create and it will keep you from overlooking things or making assumptions that you shouldn’t. Very early in my investing career I made such an assumption. I had purchased a foreclosure and erroneously believed that a furnace was in good shape because it was only two years old. The house had an oil-fired furnace for a hot water based system. The property had been vacant for quite some time and the system had not been properly shut down. As a result the seals were bad and the furnace had to be replaced at a cost of $2,000. Nothing will cure you of making assumptions like writing a check for it.
While a vacancy is an excellent opportunity to inspect a property, it should be done periodically on occupied units as well. These visits will also allow you to see that your tenants are taking care of your rentals. While normal wear and tear is to be expected, tenant abuse should never be tolerated. Keep in mind that deferred maintenance is the costliest kind but preventative maintenance will give you peace of mind.
An ounce of prevention is worth a pound of cure – Benjamin Franklin
Photo Credit: Joshin Yamada