5 Ways to Curb Maintenance Costs
Real estate investing involves acquisition, holding, and sale of rights in real property with the expectation of using cash inflows for potential future cash outflows, and hence, generating a favorable rate of return on that investment.
In other words, real estate investing is the act of purchasing real estate with the goal of making a profit and acquiring wealth. Real estate investors invest in real estate to make money, bottom-line.
With that said, there is a crucial need for income property owners to reduce and eliminate money wasting property maintenance and repair expenses.
It's one thing to collect substantial rents, but landlords who turn a blind eye to maintenance and repair costs can find that their cash flow is surprisingly lower than expected and their profits bitterly disappointing.
Okay, let's look. Here are five ways landlords can curb maintenance and repair costs, and perhaps increase the profitability of their real estate investing business.
1. Buy low-maintenance properties. This might seem obvious, but investors sometimes purchase strictly on the basis of price or curb appeal (with no regard for maintenance). Always prefer properties that are constructed with materials and fixtures that require less maintenance, and are built to last with minimal care. The same applies to yards, shrubs, and landscaping.
2. Toughen your tenant selection. Apartment buildings are not the only part of your investment that is low and high-maintenance. There are also low-maintenance and high-maintenance tenants. The idea, of course, is to avoid the latter and select the former. Watch out for chronic complainers and people who show no "house sense." You might be surprised to discover that you can eliminate up to one-half of your maintenance, repair, cleaning, and wear-and-tear costs simply by selecting tenants who demonstrate personal responsibility. Bear in mind that things seldom break by themselves and toilets do not just stop up and overflow.
3. Impose stricter repair clauses. A good way to promote tenant responsibility a bit further is to shift the first, say, $100 of every repair cost onto their tenants' shoulders. You might also want to favor high security deposits.
4. Enlist a handyman. Build a relationship with a person on whom you can regularly depend and trust. Employing a trustworthy and competent all-around handyman (or persons) to take care of your property maintenance and repairs will do wonders to ease the drain on your time and pocketbook.
5. Engage in preventive maintenance. Apply the same principle to your income properties that you would to your car. Anticipate and alleviate repairs when the cost is relatively small and always ask your maintenance experts how you might replace high-maintenance items with low-maintenance items.
If you would like the chance to work with me or one of my fellow real estate investor coaches and our advanced training programs, give us a call anytime to see if Dean's Real Estate Success Academy and our customized curriculum is a fit for you. Call us at 1-877-219-1474 ext. 125