Maintaining an Investment Property
There are some realities about owning & managing an
investment property that landlords should accept before they become landlords.
If not, the investment property that was meant to serve you as a rock solid
performer can cause unwanted expenses, energy and stress.
It is commonly accepted that tenants on the whole will not
maintain a property as well as an owner-occupier would. We are not here to make
judgements on this point, rather just let you know the facts. When you do have
a tenant that takes good care of your investment property, ensure that you take
good care of them.
Landlords make 1 of 3 mistakes with their investment
properties around this fact.
1) They under invest in the maintenance of the property – If
you buy a brand new investment property with a 10 year plan but neglect the
maintenance of the property, you end up selling an un-renovated property. The
capital gains in the general market can be wiped off due to the deterioration
of the property. When finance costs and expenses are higher than rental returns, it is not a great surprise that many landlords have difficulty
finding spare cash to maintain their investment property.
However, it is far cheaper to maintain a property than
renovate one. A stitch in time saves nine!
2) The second mistake that landlords make is they don’t
inspect the property often enough. Relying on a condition report from the
property manager is not sufficient supervision of the property. Maybe it should
be sufficient, but in reality its not. Many landlords are horrified when they
finally inspect their property having not inspected it for several years. The
actual condition of the property is so far removed from the condition reports
they have been receiving that it defies logic. This is a shattering reality
when the superb residence you originally leased out is now a battered wreck.
The 1% you negotiated off the agent’s commission won’t be
much compensation if your agent does not keep your investment property to a
3) The third mistake that landlords make is they allow
issues to fester. When the landlord is happy to let maintenance issues slide or
insists they are done on the cheap (& nasty), they set the expectation
standard for both the agent and tenant. As a landlord, it is important that you
insist your investment property is maintained to a high standard, both through
your actions and words.
All properties experience wear and tear. It is the
landlord’s responsibility to address it. If not, over time, the festering issues
become major problems.
If you know the mistakes that other investors have made, you
have a better chance of avoiding them. If you maintain the investment, the odds
of achieving an acceptable return increase.