Taking Care of Your Rental Property
If this was your rental property, what would YOU do?
My property manager sent me these pics:
It’s the patio door (what’s left of it) from one of my rental properties.
As you can see, the wood frame is rotted…and the glass is letting in all the COOOOOLD air.
Totally not cool (pun intended) for my tenants.
Who, by the way, HASN’T SAID A WORD.
You know how some investors COMPLAIN about their tenants?
What can say, mine are pretty damn awesome.
So back to this rental property.
The ONLY reason I know about this is because we did our semi-annual thorough inspections.
You ARE doing these, right?
That’s point #1.
It’s also the reason you need a property manager.
You’re able to nip these problems before they get worse.
But here’s what I want to ask you.
What would YOU do in this situation?
Would you complain and stomp your feet because you have to invest some repair money?
Trust me, there are a LOT of “investors” out there who will do just that and say “screw them…when the door falls out, I’ll see about replacing it.”
I know, I know.
Anyhoo, I hope that’s not your approach.
Here’s the SECOND piece of “great” news about this rental property.
My windows ALSO need replacing.
Check it out:
So NOW what’s the plan?
Well, if you’re running your real estate like a business, then you’ll have money stashed away for these kinds of things.
It’s called the repairs and maintenance fund.
Basically, I put away about $100 give or take, each month, for each rental property.
And by the way, I build this “expense” into the pro-forma when I analyze the property in the first place.
TOO many investors (that’s a lot to you and me) strip out these little contingency funds (like maintenance and vacancy rates) so they can “make” their property cash flow.
Some even go as far as removing the property management fee as well.
So now, by taking out those 3 key elements, they can “boost” their cash flow by AT LEAST $250 per month.
(I buy simple single family town homes, so your numbers may differ)
Might seem cool to make the deal look good on paper…and perhaps “convince” a joint venture investor to buy in…
But if you’re not putting away these funds every month, this shit comes up.
Are you freaking out trying to come up with money?
Is that when we tell the tenant “too bad” and become one of “those” landlords?
Do you call your JV investor and break the news that they need to come up with a couple grand to repair this stuff?
And certainly not a way to run a real estate business…don’t you agree?
Listen, my real estate business is practically on auto-pilot.
I’m very blessed to have amazing people on my teams and awesome tenants.
But I know that stuff will come up. It’s never as great as they paint it on the stages or HGTV.
So PLEASE be prepared and learn how to run your real estate as a business.
And that includes putting a percentage away EVERY month for vacancy & repairs.
Plus, for gawd sake, hire a property manager. If you can’t “afford” $100 bucks a month to have the privilege to sleep, you ain’t got a business my friend.
And buy the way, if you’re looking to solve more mistakes here’s a cool post.