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Understanding Repairs With Your Home Rental

System - Friday, August 14, 2020
Property Management Blog

Owning a rental property comes with its share of benefits and some pitfalls, and repairs fall into the latter category. Unfortunately, repairs typically tend to get a bad reputation, or the resident gets accused of being picky or too needy. And even though they may be the case sometimes, it is not always the case. 

Like most of us, we need a wonderful place to live in, one that is maintained, one that we are proud of; most residents desire the same thing. They are not out to nickel and dime you.

Do I have to Complete this Repair?

Understanding where the requested repair falls might help you figure out if the repair is necessary.

Repairs fall into four categories:

  • Habitable Repairs
  • Safety Repairs
  • Cosmetic Repairs
  • Operational Repairs

Habitable repairs are repairs that are needed to make certain the home is livable per Fair Housing. An example of this is fire damage to a home. A resident can't reside in a home that has fire damage, so mitigation has to be done straight away. Plumbing, electrical, and locks must be working in the property.

Safety repairs are repairs that are required to ensure the safety of your residents and their guests or even the general public. An example of this kind of repair is a buckling driveway. The buckling in the driveway is a tripping hazard. 

Should a resident report the matter and you opt not to have it repaired, then the resident or someone else is hurt, you are opening yourself up to ligation. In cases like this, a resident also has the right to report you to Fair Housing and even move out, leaving you with a mortgage and a rehab to make the property rent ready for the next person.

Cosmetic repairs are repairs that would improve your property but don't affect someone's ability to live in the home. An example of a cosmetic repair is the exterior painting of the home. 

Painting your home that hasn't seen paint for 15 years or more and taken a beating from the sun is a good idea to maintain your home, but it has no bearing on the resident residing in your home. These kinds of repairs will come up, and that's why it's important to budget for them.

Operational repairs are repairs that need to be repaired because the home was rented with the item in working order and is part of the lease agreement. An example of an operational repair is an oven. The oven might be entirely broken, or it may do the job so, so. 

It might warm up a pizza, but it won't roast a turkey because the home was rented with a fully functioning oven; you are expected to replace it. Other examples would have a dishwasher; if you rent the home with a dishwasher and it breaks down, you must replace it.

Exceptions

There are some exceptions to the rule when it comes to repairs. Case in point, carpet most of the time falls to the cosmetic category. However, there are times when the carpet really ought to be replaced; nobody wants kids playing on the stained and stained carpet. 

Nor do you want to walk on carpet that is "clean" but looks dirty because of the stains that are so embedded in the fibers that no matter how much you clean the carpet; they are still visible. Carpet is one repair that you can quickly recoup your costs on.

For example, the resident is asking carpet and its lease renewal time, agree to replace the carpet in turn request that the resident signs a two-year lease. The rental increase of $100/per month each year within the 2 years will help offset the price along with your tax write-offs on the carpet replacement.

Let's face it, if you don't replace the carpet or make the minor repairs, your residents will move out, and you'll face a rehab and a vacancy. Your main enemy in rental property is vacancy more than anything else because you face months without any rent coming in and putting out cash to repair paint and clean it for the next resident.

Reality

A majority of residents take amazing care of your rental property, their home. And they appreciate owners that take care of the home as well and don't see them as"the renter." Reality is most residents would like to get a home, but in today's market, it is hard to come with a down payment, etc., and so they are in a situation of having to rent a home. Sure, there are a few that rent because they don't have to make the repairs, pay property taxes, etc. but that is the minority, not the majority.

In a recent survey conducted by the National Association of Residential property managers, 60% of residents say the "lack of maintenance and poor customer service" are the number one reason they move from a property, it's not raising the rent. 

What residents are saying is they will stay in a property longer if the owner is willing to properly maintain the home and they will also be okay with a moderate rent increase each year. That's a win-win for all properties involved.

Benefits

As the owner of a rental property, you receive tax benefits for owning a rental property; repairs are a tax write off along with your management fees. You benefit from the appreciation of your home value, and someone else paying off your mortgage. 

Some even own the property free and clear because rents have gone up over the years each year, and they have now paid the mortgage off.