Buying a property is a big investment, and proper maintenance is vital to the long-term success of any physical asset. Property especially benefits from good ongoing maintenance, as doing so ensures landlords retain good tenants as well as protects the value of the property over time.
Neglecting an investment property can see small problems, such as mould and water damage, grow into significant issues costing a disproportionate amount to rectify. It’s because of this that landlords can save time and money in the long run by keeping a routine maintenance schedule, even if this means smaller short-term spending to avoid long-term financial losses.
In this article we’ll explore the type of regular maintenance landlords should undertake as well as provide a real-world example of the impact neglect can have on a landlord’s returns.
Maintaining your investment property adequately has many advantages. The first is financial in nature. Regular maintenance will reduce the likelihood of larger, more costly issues in the future as small problems are fixed before they can grow. Examples of such challenges can include mould, leaks, rot, or floor damage. It is equally important to stay on top of these due to the legal requirements that come with renting out your property. It’s essential that your investment property meets all legal building, health, and safety requirements, most of which are outlined in the Healthy Homes standards. Not doing so can result in unwanted and costly fines, on top of whatever costs come from rectifying the non-compliance. This includes keeping the plumbing, electrical wiring, and structure of the house safe and in working order as well as making sure that locks and fastenings work too. Find out about the laws and bylaws that apply to renting a property by visiting the Tenancy Service website.
Properly maintaining an investment property will help preserve and even increase its overall value, and potentially the weekly income too. A home with flaws will have a lower value and attract a lower weekly rental value than one that is in good condition. Having a well-maintained, healthy, and desirable property will attract the best available tenants, and reduce the likelihood of repair and upkeep costs tied to tenants that don’t respect the property. Below we list a few key factors worth considering to help keep on top of investment property maintenance.
Conduct regular inspections
One of the key actions to take towards ensuring that your property is well maintained is to conduct rental property inspections on a regular basis.
Regular inspections should be arranged by the landlord (or a property manager) with the tenant, every quarter. Many property management companies will complete inspections of the property four times a year at a minimum. A landlord or property manager must provide prior notification before entering the property, a 48-hour minimum is the current legal requirement. These regular inspections provide an opportunity to identify maintenance issues or for the tenant to discuss any problems and issues they have experienced.
Regular inspections are also the time to check up on the condition of the property. If a tenant causes damage, the landlord is entitled to ask them to repair the damage or cover the cost of replacement or repair.
General weathering, wear and tear, or degradation is all best caught early rather than once a problem has been identified. So check guttering, downpipes, weatherboard, and any places where the ground meets the walls or structure of the home for damp and standing water.
Keep on top of maintenance
Regular maintenance isn't just about avoiding costly repairs but also about providing tenants with a pleasant living environment. Happy tenants will more likely take better care of the property and stay for longer, removing the effort and cost of finding new tenants. As previously mentioned, time and money can be saved in the long run by following a routine maintenance schedule. We suggest checking out our annual Maintenance Checklist which will keep the small jobs from spiralling.
Small, annual tasks might include, but are not limited to:
- Clearing gutters and pipework of debris.
- Checking under-sink pipes for water and signs of leaking.
- Safely access the roof and look for holes, water ingress, and insulation depth.
- Check wooden window frames for warping and gaps.
- Press against the weatherboards for signs of rot and warping, nail warped boards back into place.
When it comes to bigger jobs, budgeting for maintenance tasks ahead of time can save a huge amount of stress down the line. Allowing $1,200, or 0.3 - 0.5% of the value of your house, per year for maintenance is a smart place to start. Depending on the age, location, and design of the property this can vary widely. Factors such as the size and condition of the house, and the building materials used can increase the amount of money needed to be put away. It is possible that not all of the maintenance budget will be used in one year, but then a major expense might appear in the following year! Setting this money aside and only using it for important work will help lessen the blow of the work when it’s required.
At McDonald Real Estate we are committed to removing unnecessary and stressful situations for our landlords. If a property is managed by our team of experienced property managers then if desired, an agreed allocation of funds can be put aside each month to cover such costs. This ‘keep back’ for maintenance is deducted from the rental payments made by the tenant and appear on your monthly statements so you can see how much is available. Discover more about our maintenance keep-back service here.
Real-world example
A small leak from the roof is a classic example of a small problem becoming a big problem if not taken care of. A property in our portfolio had a small leak in the roof, so we spoke to the landlord and recommended it be repaired. The cost was small so the landlord placed a temporary patch and the issue went away for several months. That winter bad weather set in and the original patch failed and a new leak appeared. It was at this point we recommended that the property be fitted with a new roof in the following summer. The cost was higher than the property owner desired and rehoming the occupants for 2 weeks to have the new roof fitted was an additional cost the landlord wanted to avoid and so the owner decided to patch the problems again.
Fast forward to the next winter and subsequent patch jobs began to fail. The water ingress had damaged the walls and hidden leaks, unnoticed by the tenant, had impacted the house’s frame. There was now no choice but to do a roof replacement, but now the roofing costs had increased significantly and the tenants had to be housed in anything that was available (which was more expensive than what would have been available with more advanced booking), and additional repairs now had to be made to the frame and floor of the property. This meant the tenants were out for even longer than they would have been for the original roof repair.
The moral of the story here is that saving money in the short term can cost you a lot more in the long run. While regular maintenance might not have stopped the roof leak, replacing the roof when repairs started to fail, would have had a lesser financial impact on the owner.
Choose tenants wisely
Good tenants can be a game-changer in the world of property investing. But what makes a good or bad tenant? Paying rent on time is absolutely essential to being a good tenant but a great tenant offers more than that.
Strong credit history and great references reduce the chance of unforeseen hardship and missed payments. Respecting and looking after the property as if it were their own ensures a stress-free life for the landlord, and a good relationship with neighbours can be helpful too.
Some people can be very good at putting on a great front when it matters or only making flattering information available at the time of application. It’s very difficult to remove problem tenants so it’s imperative that the up-front work is thorough and in-depth to remove the risk of approving someone that will be problematic in the long run.
Creating a good landlord-tenant relationship is paramount, so giving a tenant the opportunity to make minor changes to a property can actually work in the landlord’s favour. Tenants are able to make minor changes to a property as long as this is agreed to by the landlord and consent has been given in writing beforehand. In many cases, this can be a positive addition to the property but even when it’s not, giving the tenant the freedom to make the place their own increases the chance of them staying for the long term. From a fresh coat of paint to a vegetable garden in the backyard many tenants look to create a home by making changes even if they don’t reap the benefits long-term, this gives them short term happiness in a home that feels like theirs.
For your rental to be a successful investment, the property must have good tenants. So how can you make sure that you find a reliable tenant? Every landlord should be aware of the rules and regulations surrounding tenant screenings and background checks, especially when it comes to the type of information that can be requested. A professional property manager has years of experience seeking and fitting the right tenant to the right property.
Do you need help finding a tenant for your property?
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Good property management
An experienced property investor will agree that good property management can add significant value to an investment, and that working with a good company is worth its weight in gold. While it can be tempting to manage an investment property privately there are a number of obstacles that create stress, take time from other pursuits, and can be financially draining. If you have the right guidance and property manager on your side, owning a rental property can be a smooth and stress-free experience.
Not only does a property manager take over all the jobs a landlord is expected to undertake, but having a good property manager can help attract and keep good tenants right from the get-go. Many investors ignore the cost of their time when calculating investment property returns. This creates a false sense of saving when comparing the returns from self-management to those of an outsourced property management solution. Listing a property alone can cost $200+ in advertising, $100+ in background and credit checks, 4-12 hours or more of managing enquiries and hosting viewings before a dollar has been seen in returns. If you’re unsure of the value a property manager can bring then simply check out some of our success stories of proof that a good property manager can be an essential asset.
In today’s heated rental market, there’s little doubt that investing in property makes good financial sense. But, so does maintaining that investment. As a landlord, keeping an investment property up to standard means it’s more likely to attract the right tenants, see lower ongoing costs, and ensure returns are frequent due to higher occupancy levels.
If you’re in need of property management or are interested to see if your rental could be fetching more each week, then request a free property assessment and one of our trusted property managers can talk you through our services. They can provide you with a rental assessment to fully unlock the potential of your investment and will also explain our fees, expertise, and the value we can provide.
If you're looking to start or grow your property portfolio, then we also recommend downloading our ultimate guide to property investing to learn more.
