Maintaining the Investment

This past weekend, as I wallowed around in the kitchen floor of a rental unit replacing a dishwasher, I couldn’t help but reflect. Some “passive” income this is! I’ve said it once, I’ll say it a hundred times, “passive” income from rental properties is very misleading!

When actively managed, rental properties require work to keep the investment in tip top shape and to keep renters content. Over the past few weeks I’ve shared excerpts from my upcoming book, “Collect Rent, Don’t Pay It! A Beginner’s Guide to Rental Property Investing,” regarding selecting a property and building a relationship with tenants.

This week I want to share an excerpt about one of the more time consuming aspects of rental property investing, maintenance! To clarify, for this particular blog, I’m just taking a look at maintenance. Repairs and improvements are separate subjects all their own!

Maintenance is any action performed to keep the property clean, safe and livable for the tenants. This can include lawn and landscaping maintenance, replacing HVAC, refrigerator or other filters and even replacing lightbulbs. Some maintenance actions will be covered by the tenant and some are the responsibility of the owner.

It is important to spell this out clearly in the lease. For instance, we like our properties to have refrigerators with in the door ice / water dispensers but we specify the tenant must replace the filters periodically. Similarly, light bulbs are the tenant’s responsibility with one caveat, any lighting (such as large fluorescent bulbs) that the tenant is incapable or uncomfortable replacing, I’ll change out (and write off the expense).

Lawn care is the responsibility of the tenant but I will trim the shrubs and replace mulch annually at our expense. HVAC filters are the responsibility of the tenant and this is one that is particularly important to enforce.

Visually inspecting the roof for damages to shingles and sealing around windows or doors periodically are examples of other regular maintenance tasks that I as the owner routinely perform. Quarterly pest control is another maintenance item that I cover for the properties that we manage.

It is completely up to the owner how much maintenance of the home they want to entrust to the tenant, what they want to outsource and how much they want to take on. It is getting more common, especially for the larger apartment complexes, for 100% of the maintenance performed by property management. Worth considering when deciding how much to ask of the tenant.

So how does an owner make regular checks and perform maintenance to ensure the investment is being cared for without intruding on a tenant’s right to privacy? First, if I go out to a property on a repair call I will make it a point to check several items when I am inside the property.

Are the windows, screens and blinds serviceable? Any leaks under the sinks, holes in the wall or other items? Probably most importantly, is there a good filter in the HVAC. This goes for the exterior as well. I will walk around the property and make a visual inspection of the roof and windows.

I make it a point to keep a stock of common maintenance items such as filters, caulk and bulbs on my truck. If upon an inspection of the roof any shingles look questionable, I will get it fixed before it becomes an issue.

One absolutely critical check is the leak test. Many people don’t realize you can observe a home’s water meter to determine if there are any leaks at least on the supply side (drains must be visually inspected). I will flip open the water meter lid every time I stop by a property and observe at least two to three minutes for movement on the meter.

These checks are the essence of maintenance. In the Army we called it Preventive Maintenance Checks and Services or PMCS. In the manual for any piece of equipment in the Army, there was a detailed list of PMCS checks to make. Perhaps there is a lesson to take away here!

I’ve never gone so far as to make a checklist but it certainly is not a bad idea. While the tenants may get a bit annoyed at the checks, they will also appreciate that you are maintaining their home. And often times they will mirror that behavior right back at you by calling immediately whenever there is a maintenance concern.

This was just a quick look at the chapter on maintaining the investment. In Collect Rent, Don’t Pay It! I share in detail how we manage maintenance, repairs and improvements to include maximizing the tax benefits of writing off repair costs!  eBook is available now on Amazon and paperback is coming soon!

Want to learn more about the financial truths that have helped our average American family achieve success? Check out my book, Millionaire on a Worker’s Budget: Five Financial Truths to Build Wealth on sale now at Amazon!

The commentary provided in this blog is for informational purposes only and is not intended to be a source of financial or investing advice.

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