An investment property is a business. Your job (or your property manager’s job) is to maximise income and minimise expenses. Some of the largest expenses for a rental property are associated with repairs and maintenance however there are measures to help reduce the volume and cost of these works.
Know your responsibilities
First and foremost you should be identifying what items you are obligated to attend to. Some landlords are hopeless and refuse to spend any money on their property, even when it’s legally required and/or will result in a financial gain. On the other end of the scale you find landlords that are constantly adhering to tenant requests to update and improve without seeing a financial return from all the capital expenditure. Know the difference between necessary repairs/maintenance and those capital improvements that can wait until a time that you can address them efficiently, economically and holistically - more on that later.
Keeping your maintenance costs down
Property managers have no tangible incentive to shop around for you, so the bad ones won't. The other issue is that the standard industry practice is to maintain a list of ‘go-to’ trades and use them across all their managed properties. Unfortunately these tradies are typically busy and expensive (they know they’re getting the work, why would they be competitive). With this approach, not only are you paying a premium but there are usually delays to the works due to their busy schedule which can lead to other issues such as tenant disputes or the problem becoming worse i.e causing further damage to the property.
The flip side to this is if you have a good property manager. They will brief tradespeople properly (a comprehensive report and work order), collect multiple quotes from trusted trades, introduce an element of competition when negotiating on those quotes and then push for the trade to action these work orders quickly.
A real world example was when Managed recently took over a property in Balmain East from a small agency in Surry Hills. They had submitted a quote from their ‘go-to’ electrician for $1,550 prior to the landlord just before they jumped ship and transferring to us. Within 2 hours on our platform, 3 quotes had been collected and the client paid $700 for the job. It then took just 3 days to be completed.
Tracking, reporting & staying on top of maintenance
Tracking work orders is an important part of ensuring items are attended to quickly and effectively. They should be followed by your property manager from the original request through to the successful completion of the job however being across all the aspects of a larger work order can be a full-time job in itself - let alone if your property manager has 30 or more open jobs at any given point.
Your property manager must have intelligent and efficient systems so they can keep all parties informed, gather quotes, seek approvals where required, coordinate inspection/appointments, then receive confirmation that the works were completed to a high standard. Unfortunately the industry offers no tools to streamline this process so Managed has developed our Managed Maintenance Platform - a feature that couples real time tracking with actionable tasks plus push notifications that are sent straight to your phone or email. Contact us to find out more.
Following completion of a work order, accurate reporting and record keeping is key to ensure no future double ups of the same task. You should also be asking how does your PM test the quality of the works? Are the works now recorded in the property’s condition report? Is there a record of warranties & invoices in case the fix was not permanent or effective?
Your property manager should document all this information to ensure that you’re protected and not exposed to duplicate expenses or additional damages.
Finally, preparation and documentation is key to staying on top of all this maintenance. Detailed ingoing and outgoing inspection reports by someone experienced in determining agent/condition of fixtures and finishes is priceless. They should test all items, maintain a proper history of repairs, purchases and warranties as this allows that agent/owner to forecast expected issues.
This allows the owners to understand and plan for any potential expenses plus offers greater control about when and how those works are attended to. A simple tool for tenants to help them identify and report issues also goes a long way too. They’re on the front line with the property and encouraging them to be upfront and proactive will allow you to keep a lid on expenses. For this reason, tenants are included on the Managed Maintenance Platform to ensure the process to report and update property manager/owner is seamless and hassle-free.
When maintenance and repairs should really be a renovation
Forecast expenses & weigh up the pros and cons of maintaining an older property vs the savings in repairs/maintenance achieved by spending more money up front doing a property update. Often chasing your tail fixing items sporadically over the course of a tenancy will be the most expensive and frustrating approach - if the property is tired, take the time to review what improvements could be made and the benefits of taking a holistic proactive approach to the condition of the property. You will see a suite of other benefits such as cheaper works (not paying premium call-out fees for individual tasks), you will see a greater rental return as you have improved the appeal of the property in the market, you will see a higher valuation thanks to your capital expenditure and finally you will see some great tax advantages from claiming depreciation.