Tenants, Toilets and Other
Rental Property Repairs

by Dave Peniuk

Being a rental property owner means dealing with maintenance, repairs and tenant upgrade requests. Even if you've hired a property manager, you will still have decisions to make regarding the upkeep of your property.

In general, you should set a maintenance schedule that keeps your property and the unit(s) in your property in the best shape possible. There are several reasons for doing this, but the biggest one is that a property that is kept in good condition attracts and keeps good tenants. The second big reason for doing this is that regular maintenance is often a good way to keep costs down. If you leave things unfixed for long periods of time it can cause other issues. For example, a leaky sink left unfixed could be damaging the cupboards and even the floor underneath the sink.

If you have a property manager ask about their schedule for doing the following things. If you manager your own property, then here's a suggested schedule for checking on things.
 
Monthly:
Walk the exterior of the property and pick up garbage from around the property. Make sure the lawn is mowed, weeds are pulled and everything is in good shape. If you have laundry facilities, check that the lint is being removed from the dryers and take out any money if they are coin operated.
 
Quarterly:
Check windows, doors, and exterior of the house for any leaks or damage. It's also a good time to check on the furnace or air conditioner and change filters.
 
Semi-annually:
Change the batteries in the smoke detectors, check carbon monoxide detectors, clean gutters, check appliances, plumbing and electrical outlets in the house. Check for things that might be loose as well (door knobs, railings, or screws). You aren't looking for things to fix but you want to be aware of things that may require maintenance when a tenant moves out or trying to find little things to repair cheaply as a way to prevent bigger problems later on.

When tenants move out:
Have the carpets and drapery cleaned. Paint the walls if necessary (and usually it is), and get the unit professionally cleaned (including the stove and fridge).
 
Planning for this regular maintenance on your rental property makes things fairly easy. You will have a good idea of when major expenses like a new roof, a dishwasher or a paint job will be required. You can set aside a little extra rent money to cover these costs. The trickier part can be knowing when to make improvements to a rental property when a tenant is asking you to spend money.

In our Toronto tri-plex we recently turned down our tenant's request for blinds in the living room of one unit. But at the same time, we agreed to put in a new toilet in another unit. Our tenants can easily figure out that we're bringing in nearly $4,000 in rent per month from this property, so they may think we're being stingy by refusing their requests. But, you have to keep in mind that, while you want to keep your tenants happy the money your spending needs to either prevent or reduce an expense or it needs to generate revenue.

In the case of a renovation or upgrade requested by a tenant, we ask ourselves a few questions when we're considering whether to do the work the tenant is asking for:

• What are the costs of not doing it (is the tenant likely to leave and what will that cost if they do?)?
• Is there another way to address the problem?
• Are there any issues with delaying the expenditure?

After we consider these things, we use a final formula to calculate how long it will take to recover our costs.

    Total Cost of the Upgrade or Repair / New Money Earned (or Money Saved) each Month = # of months to repay the expense.

On items under $1,000, as a general rule of thumb, if you can recover the cost in 12 to 18 months then the money is well spent.

In the case of the blinds, the tenants wouldn't pay more rent just to have blinds. Instead we agreed to pay for dry cleaning the curtains which will be less than $100. There's no direct return on this - but the tenants wanted the "dirty curtains" replaced so this will keep them happy and it's not a large expense - especially given that the tenants have been long term.

For the toilet replacement request, we decided that getting rid of the grungy old toilet will not get us higher rent, but it will make it easier to attract and keep good tenants. And, if we replace it now, our tenant's father (an experienced plumber) will install it for free. Finally, we're replacing a water guzzler with a low flush model (est. water savings of $10/month) that will qualify for a $75 water conservation rebate from the City of Toronto.  The formula of benefits looks like this:

    $250 - $75 rebate = $175 Cost of the Toilet

    $175 / $10/month water savings = 17 months to pay off (PLUS we save $80 on installation).

The cost savings plus the added benefits of saving installation costs made it a very appealing use of our cash. Just remember - real estate investing is a business and you need to get a return on any money you spent - even if that return is simply in cost savings!
 
If you are managing a property yourself there's some great books out there to help you. Two books definitely worth checking out are:
 


Property Management Kit For Dummies







The CompleteLandlord.com Ultimate Landlord Handbook (and we're pleased to be hosting William Lederer in a teleseminar in June - sign up for our real estate investing newsletter for details!)
 



Also, some websites worth checking out to learn how to do some of the basic maintenance things:

    * http://www.thefunplace.com/house/home/
    * http://allabouthome.com/
    * http://www.ehow.com/videos.html
    * http://www.expertvillage.com/video/51_fix-leaky-faucet.htm

Finally, here's a blog post I wrote last year about the difference you can make with some cheap hardware changes, paint and a bit of elbow grease.
 
http://revnyou.wordpress.com/2008/10/16/real-estate-renovations/

I know that's a lot of information to digest and a substantial list of resources, but your monthly cash flow is dependent on you maximizing your rental revenue and minimizing your expenses - so this is pretty important stuff to know!

Published April 17th, 2009

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