Property repairs, maintenance and improvements are a part of every property manager’s role, and required for every property.
It’s important as a property investor to know the difference, and what you ‘need’ to do, ‘should’ do, or ‘want’ to do. How do you manage property repairs, maintenance and improvements to make sure that you get the balance right, keep your tenants happy, whilst looking after your budget and bottom line considerations?
Firstly, considerations such as your legal requirement to do, ‘necessary’ property repairs, and perform on-going maintenance need to be built in. You also need to consider the impact that improvements can have on the rental return of your property, and how all of these considerations fit together in keeping your tenants appropriately and realistically satisfied.
A property repair is the fixing of something that is broken or not working properly. You’ll usually hear about this through the tenant, if you are the property manager.
Property repairs can be determined as urgent or non-urgent. Urgent repairs are considered in terms of essential services, or danger. If they fall into either of these categories, then of course these repairs need to be dealt with quickly. Non-urgent repairs that don’t fall into these categories need to be considered in terms of the legal obligation of the landlord to keep the premises in a similar condition to when the property was leased – with due consideration for fair wear and tear.
Wear and tear is about the normal and gradual ageing of things given general use..
– such as carpet slowly wearing over time. Depending on your investment strategy and property, you may want to maximise rent and asset value, and maintain a spotless, modern and flawless property – but more often, to optimise your return as an investor, you will appropriately delay non-essential repairs, maintenance and improvements so as not to over-capitalise on your property and impact your bottom line, whilst realistically balancing this with due consideration for potential return on investment, along with your tenants comfort.
You need to be aware that as a property ages, wear and tear left untended will affect the rental and asset value of your property. Well maintained properties – such as those with freshly painted interiors, new carpet or flooring, and well maintained outdoor areas will of course impact your rental value and yield. Keeping an eye on the rental values and condition of similar properties in your area, and having a good relationship with your property manager, will help you to determine when it is time to invest in this maintenance.
Improvements, such as renovating a kitchen or bathroom, or extending the property to create an extra room, are a real consideration depending on your investment strategy.
Well considered and carefully planned improvements can create a very strong investment return over time – for example, if you have an old, unrenovated kitchen, with rusty taps and flaky out of date cupboards – potential tenants will expect a lower rental rate than if the property has a kitchen that has been modernised or renovated. Likewise, the addition of an extra room or granny flat, if feasible, can be a great investment when you consider the current rental value of the extra space, and determine the return on investment over time – with the obvious increase in rental and asset value.
Owning a property carries legal requirements for the health and safety of your tenants, their guests and other people entering the property. Having an experienced property manager to help you manage these legal requirements with what is sensible to invest in is important. Understanding your strategy, and being very clear on your numbers based on the right information and advice from an experienced property agent means you will always be clear on estimated budgets for maintenance, and with considerations in your budget for appropriate repairs.
Also, as an investor, recognising the opportunities and returns available from improving a property should be identified and clear when looking to purchase, as is often a key strategy for investors.
Whilst some property repairs will always be required, maintenance and improvements are optional – but being clear on what is necessary or prudent to do, and when, can shift the time-frame around achieving your investment goals.
Shrewd investors will consider improvement opportunities versus over-capitalising, which could negatively affect your returns, and may cut your profits – so dealing with experienced property agents and managers around these essential considerations can significantly impact your investment success.