Change The Way You Look At Maintenance As A Landlord

A FOCUS ON LONG TERM PROFITS EXTENDS INTO HOW YOU THINK ABOUT PROPERTY MAINTENANCE EXPENSES

When it comes to your properties it seems that “maintenance” is the wrong word for “maintenance”. When we use the term, we’re talking about physical work that needs to be done to “maintain” the value and comfort of the property. But in reality, maintaining the current value is not your goal and it’s not the result. When you perform needed physical work on your properties, you are increasing value. This basic tenet is key to successful real estate investment. Without that understanding you can’t make decisions that  are focused on long term outcomes and profits. You will not succeed in real estate investment. All this is to say, property owners cannot afford to view maintenance through a negative lens. To succeed and maximize long term profits, you need to embrace maintenance.

 

LEARN MORE: JUST BECAUSE YOU BOUGHT A RENTAL PROPERTY DOESN’T MEAN YOU’RE GOING TO MAKE MONEY

 

 

OBSERVABLE MAINTENANCE TRENDS

With over a decade in the property management business to draw from, owner tendencies have become pretty predictable. People are typically fine with small maintenance issues that arise but the bigger, and more costly, the job, the more resistance and hesitancy. This clearly speaks to that inability to embrace maintenance and instead view it as an expensive nuisance. Humans are instinctively loss averse, so this isn’t surprising, but it’s still incorrect. To put it bluntly, allowing your survival-driven caveman brain to make investment decisions is not how you get ahead.

 

LEARN MORE: MAINTENANCE IS THE NUMBER ONE POINT OF FRICTION WITH PROPERTY OWNERS

 

SOLUTION FOCUS

Speaking of getting ahead, those who do separate themselves from the field adopt the practice of viewing problems as obstacles in need of solutions. This positive framing naturally lends itself away from getting caught up with immediate costs (and perceived losses) and toward embracing the current situation as an opportunity. When a maintenance issue arises there are three primary reasons you should embrace this opportunity to provide a solution:

1. It’s an opportunity to improve the value and quality of the property
2. It’s an opportunity to improve the tenant experience
3. Money is going to come out of your profits one way or another, so why not put it toward your property, rather than Uncle Sam’s pockets?

 

LEARN MORE: THE POWER AND INFLUENCE OF ALIGNED INTERESTS

 

OPPORTUNITIES FOR IMPROVEMENT

As mentioned above, the need for maintenance work should be seen as an opportunity to improve the quality and value of your property. Things will inevitably need to be fixed over the life or your property. There are no perfect tenants that do not contribute to the depreciation of rental units. We need to maintain and improve these properties, and in exchange we add equity to the asset and further legitimize the rental prices tenants pay. 

When it comes to tenants, the goals on both sides are the same. Both owners and tenants want a long term, hassle free rental experience. There is no better way to meet those aims than catering to maintenance requests and keeping tenants happy. Happy tenants are paying tenants. Happy tenants also take care of your property far better than unhappy tenants. Therefore, happy tenants provide you the opportunity to add additional value to your property because you’ve shown respect by responding to the physical work when it arises. It’s all a simple and profitable dance, but property owners need to lead…if you’re looking down at your feet, stuck counting pennies in the here-and-now, unable to focus on the next step and long term profitability, then you should probably get off the dance floor.

 

LEARN MORE: THE HIDDEN VALUE OF STRONG TENANT RELATIONSHIPS AND A LONG TERM VISION

 

DEFERRED TAXES: a.k.a. YOUR PROFITS AREN’T ALL YOURS ANYWAY

The reason inexperienced real estate investors might be counting their pennies and getting upset about the need for maintenance work is because they’re focused on their (short term) monthly profits. This is a mistake for all the reasons mentioned above, but there’s another HUGE piece of the puzzle to be cognizant of. At the end of the year, any profit you make from your rental properties is considered income and is taxed as such. So if a property owner is pinching pennies and avoiding maintenance and then is happy to have earned $10,000 for the year, a considerable amount of that 10K is going to the IRS by April anyway.

Instead, he or she could have spent that money to invest in, and add value to, their rental properties. In that way they’d be adding to their equity with money they weren’t going to keep anyway. Anecdotally, we have a typical client who owns a 4-unit building and in five years of ownership either breaks even or makes about $2,000/year after accounting for all expenses. This year he made $15,000 in profit and was psyched…but when it came time to file taxes, the usual return of $4,000 he was accustomed to changed to a bill to the government for just over 5K. Perhaps, when he’d noticed that profits were up this year, he should’ve considered replacing those old rusty coin-op laundry machines with new models. This would’ve decreased his taxable income and created a new revenue stream with the money he would’ve owed to Uncle Sam anyway.

 

LEARN MORE: 3 TAX DEFERRAL STRATEGIES FOR REAL ESTATE INVESTORS

 

NEXT STEPS

As a professional property manager, it’s Nexus Property Management’s goal and responsibility to help educate property owners and prospective property owners for the sake of improving investment opportunities for all. Real estate investment is an avenue for investors of all ages and backgrounds and it’s our hope that the recent uptick in hiring professional property managers will continue. There is no doubt that having a professional in your corner, regardless of the arena, is the best way to maximize results. Reach out to the Nexus team closest to you.

 

LEARN MORE: NEXUS’ GOAL OF REBRANDING THE PROPERTY MANAGEMENT INDUSTRY

 

MORE POPULAR NEXUS ARTICLES:

1. MAINTENANCE IS THE NUMBER ONE POINT OF FRICTION WITH PROPERTY OWNERS

2. DON’T NEGLECT YOUR COMMON AREA MAINTENANCE

3. HOW TO HANDLE TENANT PARKING DISPUTES AT YOUR RENTAL PROPERTY

 

 

Mick Lefort is the Vice President of Operations for Nexus Property Management®. A National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.

 

 

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