o many property investors I meet and talk to don’t grasp the concept that property investing is a business and first and foremost, should be run like one.
Your revenue is your rental income and expenses are your mortgage, property management fees, rates and property maintenance. This will leave you with either a profit or loss dependant on how you run your business.
When buying a property, maintenance should always be factored into your costs on an annual basis. This figure may range from $500 for a new home with a builder’s guarantee where you may simply have gardens to maintain or trees to be trimmed: or simply an annual gutter clean and house wash.
However, if your property is an older dwelling, there will most definitely be more maintenance on probably all aspects of the property, at some stage.
So how do you prepare and plan for annual maintenance and budget for those cost accordingly?
I recommend that you either carry out an annual maintenance check on your property yourself – Branz produce a fantastic publication called” Maintaining Your Home”.
Those of you who are of a DIY nature will find everything you need to prepare and plan maintenance of your investment properties inside, with clear guidelines and which jobs you should and shouldn’t take on and why.
For those of us who prefer to leave it to the experts, there are many companies such as ours who will provide a detailed report for as little as $169 which you can then tell us to plan your maintenance and budget based on professional advice in regard to timeframes and consequences of not carrying out works that are highlighted.
Don’t leave the maintenance schedule of your investment properties totally to your property manager; if you can be involved, do so.
You wouldn’t buy a $300,000 car and leave the upkeep and maintenance to someone else, so take some responsibility for your business, even if you are at a distance, and get involved.
Being educated and aware is not the same as being hands-on, it just means you understand your business.
It is extremely important that maintenance is carried out at the right time of year in many instances. Gutters should be cleaned and serviced prior to winter and on an annual basis. If your property is covered with large trees then you should consider some form of gutter guard as a long term solution.
Trees should be trimmed, with care taken to work within any effects that seasonal problems may produce and if unsure about council rules and regulations or native status, then check with an arborist or your council first.
Never allow trees to grow over roofs and gutters if at all possible.
House washes are best coming into summer when exteriors are able to dry out properly and windows can be opened afterwards.
Ensure drain covers are on and that water is flowing where it is meant to on your property and from neighbours – down storm water drains preferably.
Again, try and sort this before winter when it all blocks up and overflows it will cost a lot more and the damage may already be done.
My biggest bugbear is roofs where out-of-sight is out-of-mind for most landlords. This will be your biggest cost if in need of replacement , so have them checked regularly and attend to any leaks, no matter how minor, by professional companies.
Believe me when I say cutting corners on roofs will cost you plenty in the long term.
I strongly recommend that you ensure your property has either dehumidifiers (if your tenants will use them) or you install a ventilation system, particularly if your property is older than 10 years.
The damage that condensation and mould can do to curtains and blinds, let alone paint on ceilings and walls, through to rotting timber architraves and skirting’s can be massive.
Not only is it very unhealthy for tenants to be living in a property like this, but you will end up with serious maintenance costs to remedy the mess.
Around 50% of investment properties we see are poorly ventilated and require some form of maintenance. Around$350 will buy you a heavy-duty bathroom fan with a run-on timer (tenants don’t leave windows open in our experience) that will mean your bathroom will stay ventilated and condensation free.
There is simply no excuse not to take advantage of the government’s scheme to insulate and heat properties nationally.
Those who have tenants on benefits can get up to 60% subsidy which is a real bonus for those with properties needing an insulation upgrade. Even a 30% contribution makes some form of insulation viable, especially since tenants have more choice at present, as the economy continues to put pressure on rents and in turn landlords.
Our own properties in South Auckland are always in demand because they are warm and dry. They rent easily, even in winter, with current tenants referring family members to us simply for those reasons.
I am constantly reminded by tenants how small things make a difference. I was talking to a tenant four weeks ago who had given notice on a property they had been living in for three years.
Whilst making small talk she told me the reason she was leaving was because she had asked the landlord for over a year to sort out two leaking taps and two window catches that were broken. The landlord had promised numerous times to sort the issues but never did.
The tenant became frustrated, started looking on TradeMe and found a “fantastic place “ for the same rent two streets over, and was off. That’s just bad business. I drove past the property last week and the “for rent “sign is still up.
Remember this is a business. What sort of business doesn’t look after its customers? The cost to carry out the work was less than $200! The loss of rent was already $1050.00 and counting.
It is worth checking with your property management company what system they have in place for dealing with maintenance issues on your properties. Do they have a timeframe in which contractors will make contact with tenants and are they made aware when problems are rectified on site?
Setting a limit on maintenance is essential to keep your costs under control, but contractors who do not understand your property is a business will erode your available funds very quickly.
Do you want to be informed of possible scenarios including ageing roofs, major painting issues or damp problems so you can work with the property manger to ensure those issues are budgeted for and in turn ensure your property always remains tenanted above other properties.
There are many great property management companies out there and they can be worth every penny and more, so make sure your lines of communication are open with them and if your property is always in demand they are definitely doing a great job and will also be looking after your property maintenance as part of providing a business to business solution.
So my message to you whether you manage your properties yourself or have them managed for you, “Be A Wise Landlord” – maintain your properties.
Always remember property investing is a business and should be treated as such.
Get involved with maintenance rather than leaving it to your property manager
Mark Trafford Director “Maintain To Profit”