11 Jan Why Deferred Maintenance is Not Your Friend
When it comes to being a landlord, the never-ending cycle of maintenance and repairs can be exhausting and expensive. It seems when one thing gets fixed, another breaks, and you’re constantly on the phone with a contractor or looking up how to do it yourself.
If you’re not careful, you may fall into the cycle of deferred maintenance – or the “I’ll do it later” mentality. Some minor repairs are non-emergencies, and it may be easy to save the time and money for another day – but before you hold off on necessary maintenance, consider how it may come back to bite you.
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What’s so bad about deferring maintenance?
Deferred maintenance is exactly as it sounds – repairs that are held off for another day, but could be addressed now for less time, effort and money.
We’re all guilty of procrastination once in a while, but when it comes to your rental property, don’t let a problem get worse before fixing it. Deferred maintenance can also take place in avoiding big-ticket projects, such as a new roof, by patching the problem with minor repairs.
These repairs are only temporary, they always lead to the initial problem still needing to be fixed, and in the long-run, you’ve spent even more money than you would have if the larger initial repair had been made in the first place.
Procrastinating maintenance can lead to even more problems with your building, and before you know it, you’ve added safety concerns and extra labor to the laundry list of expenses. The high price of deferred maintenance takes place over the long-term: by the time you’ve made several small repairs to maintain a shoddy asset rather than fixing it, you may have racked up expenses that cost even more than if the problem had been properly handled the first time around (not to mention, it still needs to be fixed).
If you hadn’t handled the repair to begin with because it was minor or non-threatening, the problem could be even greater now and require a more serious and expensive fix than if it had been addressed initially. See what I’m saying? Deferred maintenance may sound like an okay option in the present, but in the long run – you’re almost always hurting your property and your budget.
Sniff Out Deferred Maintenance
Anytime you buy, you should determine the maintenance and repairs needed to bring the property to your desired shape. In the midst of this process, you should also be on the lookout for deferred maintenance – what repairs are not a problem presently, but will be soon?
What major areas (roofing, heating, plumbing, etc.) are due for service?
Deferred maintenance is a major component in how good of a deal you’re really getting. If the price is right but the roof needs replaced in the next six months and there are unaddressed plumbing issues, then the deal isn’t so great after all. Be analytical about deferred maintenance before you buy and crunch the numbers – are the expenses, time and labor worth the price you’re getting?
After You Buy
Once you have acquired the property, all repairs and maintenance fall on your lap, and you are responsible for addressing them in a timely manner. In order to avoid surprise repairs and emergencies, inspect your property on a regular basis to be sure all major systems are in quality shape.
If you spot a problem, fix it as soon as possible – don’t hold off for another time and let it get worse, because waiting will likely result in a heftier bill.
It’s a good rule of thumb that all maintenance should be preventative – remember, your goal is to maintain. Waiting for minor repairs to turn into emergencies will potentially cause other issues to arise in the building, not to mention the added stress and expense.
This system is also helpful for smaller repairs, such as replacing filters or bathtub/shower caulking, because you’re maintaining the building quality while preventing other repairs due to neglect.
Setting the Money Aside
The number one reason for deferring maintenance is lack of funds to address it in the present. Money for capital expenses should be set aside each month as a safety net to address repairs as they arise.
By maintaining a sizable amount of money specifically for handling repairs, you ensure the ability to treat them immediately and save yourself the stress of scrapping money together. It can be difficult to know just how much money should be setting aside for capital expenses. Older buildings typically require a larger sum set aside because more repairs are to be anticipated, while a newer building may get by with having less money allotted.
Additionally, different properties will have different needs – for example, a single family home likely needs less money saved for repairs than a multi-unit apartment complex. The best way to determine how much money is a fair sum for capital expenses is by listing all of the major systems and their conditions. How old is the HVAC system? When was the roof last replaced? What age and condition are the major appliances currently in?
After examining the status of the property’s major systems, determine what repairs will need to be addressed with priority and their estimated price tag. By having an organized account of their conditions and future repairs, you can calculate an appropriate amount to set aside and create a plan to replenish the sum once you dip into it.
It’s not super exciting to think about setting aside money for a rainy day, but you’re better safe than sorry – and the day your HVAC system checks out, you’ll be thankful you thought ahead.
If minor repairs pop up and require a little bit of time and money to address, avoid the deferred maintenance monster – take care of them now so they don’t get worse. It’s okay to live life on the edge every once in a while – but when it comes to your property and the quality of living for your tenants, don’t take a backseat.
