5 Ways To Curb Your Rental Property Maintenance and Repair Costs
The purpose for real estate investing is to make a profit. Real estate investors want to acquire, hold, and sell rental income property in order to generate more than enough cash inflows to cover all the cash outflows required to keep the property in service so at the end of the day the real estate investor is able to enjoy a favorable rate of return on his or her investment.
But here's the problem. Many real estate investors tend only to address half the problem. Whereas they focus on ways to amp up the cash inflow with a solid rent structure, they also tend to ignore the maintenance and repair costs that are driving the property's cash outflows. Therefore they wind up disappointed because even with the abundant income streams generated, their subsequent cash flow and profitability is lower than expected.
So in this article I want to suggest five ways real estate investors can reduce and eliminate money-wasting property maintenance and repair expenses in order to curb cash outflows and thereby boost their chances to enjoy a higher profitability on their investment.
1. Know What You're Buying
Too often real estate investors fall victim to the property's sale price or curb appeal and disregard the issue of maintenance only to discover later that they purchased a money pit. So dig deeper.
Look closely at the type of materials that were used to construct the building, the types of fixtures included, and the types of shrubs used in the landscaping. The idea is for you to always prefer less maintenance with minimal care.
2. Regulate Tenant Selection
You might be surprised to discover that you can eliminate up to one-half of your maintenance, repair, cleaning, and wear-and-tear costs simply by selecting tenants who demonstrate personal responsibility. After all, fixtures seldom break or toilets stop-up and overflow by themselves.
Of course it's not always easy to discern a good tenant from a troublesome one, so maybe watch for their "house sense." In other words, do they appear to care how well they live, or are they simply looking for a roof over their heads with no regard to how they live?
The idea is not to simply fill a vacant unit with just any renter. Be selective, even if it means sitting on a vacant unit. Because in the long run you're investment will fare better with low-maintenance rather than with high-maintenance tenants.
3. Impose Strict Repair Clauses
This can be tricky because no landlord wants to alienate or keep out good tenants, but it is a good way to promote renter responsibility by shifting some amount of every repair cost onto the tenants. Perhaps by making them responsible for the first $100 or so of every repair cost; or maybe by merely collecting a high enough security deposit to cover repairs.
If you're new to real estate investing you might want to see how other landlords in your market area handle this. The idea is to tread lightly but cover yourself.
4. Recruit a Handyman
Using a trustworthy and competent person to take care of your day-to-day property maintenance and repairs will do wonders to ease the drain on your time as well as improve your status with tenants because they know the landlord is listening and is responsive.
Prefer to do some of the work yourself? Fine, as long as you don't shoot yourself in the foot and repair it incorrectly, or over spend, or respond so slowly to alienate your tenants. At the very least build a relationship with a person on whom you can regularly depend and trust just in case.
5. Do Preventive Maintenance
It's always going to save you money in the long run if you anticipate and alleviate repairs when the cost is relatively small and then fix it before it breaks or gets worse. Think about it.
When a leaky roof or faucet or toilet isn't fixed in a timely manner ceilings and floors can become damaged and wind up costing you a lot more than a simple repair. So do regular inspections, respond quickly when your tenants report a problem, and maybe consider asking your maintenance experts how you might replace high-maintenance items with low-maintenance items.
Rule of Thumb
Real estate investors that pay close attention to a property's entire financial performance—including maintenance and repairs—are more likely to succeed at generating a profit from investment real estate than others less discerning. Not hardly genius, just a reminder.
Here's to your real estate investing success.