The most common challenge facing landlords is balancing how well they maintain their rental properties with increasing their cash flows on an ongoing basis.
While it may seem like it makes sense to put off maintenance so you can keep your monthly income up right now, this will come back to you many times.
Preventive maintenance (the opposite of delayed/defensive maintenance) will help avoid costly repair jobs, emergency situations, and/or tenant complaints.
The Struggle Between Maintaining Property Quality and Maximizing Monthly Cash Flow
You want your rental property to be well-maintained, so quality will attract better tenants and protect your long-term investment. You also want positive cash flow each month.
Every time you spend a dollar on repairs, that’s one less dollar going into your pocket. Therefore, when you have to decide what to do about a repair, there is always a cost-benefit analysis involved.
When something needs to be repaired, the most obvious thing to do would be to put off doing the work as long as possible. Patch the roof where the water is leaking instead of fixing the pipe, or service the HVAC unit after it breaks instead of immediately.
On paper, at least, you are saving dollars now, and therefore your monthly statement may look better. However, you need to understand the big picture.
What happens when you delay maintenance?
Small issues typically do not remain small. They escalate like the following:
- Slow drains can become full-blown sewage backups
- Worn-out roofing shingles can cause ceilings to collapse and lead to mold.
- Neglected water heaters will burst and flood units.
Expert property managers agree that reactive maintenance (i.e., repairing a problem once it occurs) costs property owners approximately 2-5 times more than proactively maintaining the property.
On top of financial loss, ignoring potential problems in a rental unit affects the landlord’s relationship with their tenant(s). Tenants take note of how well you address any issue. If you ignore an issue, your tenants will begin to lose trust in you.
When your tenants lose trust in you, they are likely to move out as soon as possible. On the other hand, Landlords who prioritize recurring rental property maintenance allow higher tenant retention and consistent income.
Once tenants leave, you’ll be left paying for vacancy losses, additional turnover-related repairs, and cash flow losses. It may seem like a no-win situation; however, there is hope. You don’t have to sacrifice quality or cash flow. The answer lies in moving your focus from being reactive to proactive.
Why Property Management is Key to Lower Repair Costs?
You may be thinking: Is a property manager truly able to assist me with spending less money for repairs? Yes, they can, but probably not how you are imagining.
A skilled property manager will do much more than simply repair items sooner. Instead of being reactive, property managers help you prevent issues prior to them occurring. This is where most cost savings occur.
The Financial Impact of Reactive Maintenance
Reactive maintenance means you wait until a thing breaks, then you fix it. At first, it seems like you’re getting a bargain on how much you spend; after all, you aren’t spending anything on upkeep. However, what you get out of this type of strategy is expensive.
The data consistently show that reactive maintenance is about 3-5 times as expensive as planned preventive maintenance. So why does there have to be such a huge difference?
Emergencies require immediate response. As a result, you are paying the higher overtime labor rate; you are being charged high prices for rush shipping on parts; and you’ll most likely incur collateral damage due to cascading failure, such as a leaky pipe causing water to seep through the wall.
In addition to the initial costs, neglecting routine maintenance impacts your property’s long-term value. Water damage, hazardous environments, and dissatisfied tenants result from neglecting regular maintenance.
The Advantage of Preventive Maintenance
Rather than waiting for something to fail, you plan out regular check-ups, preventative care, and install smart home upgrades that ultimately save costs.
In some respects, this can be thought of similarly to how we perform regular oil changes on our cars. The cost may be slightly higher each time you have the oil changed; however, it will likely save us money down the road when it comes to replacing the engine.
As far as statistics go, data show that the use of preventive maintenance could decrease emergency repair calls by up to 60%. Additionally, properties that consistently adhere to preventative maintenance programs typically experience a reduction in total maintenance spending of 25-30 percent compared to those that do not utilize preventative maintenance. Furthermore, some studies indicate a potential 45-65 percent reduction in emergency repair calls with a complete preventative maintenance system.
Preventative maintenance also allows you to take control of what is happening at your property. When using preventive maintenance, you can plan and budget for all necessary repairs before they occur. This will allow you to avoid having to come up with last-minute funds to cover an unexpected expense.
You can also schedule all needed repairs during regular business hours and at regular rates (not premium/emergency rates). Finally, with preventive maintenance, you can create a maintenance schedule that matches your cash flow needs, allowing you to respond to issues as they arise.
Consulting a local Philadelphia rental manager can suggest ways to proactively prevent costly maintenance. An experienced rental manager has systems, vendors, and schedules that enable him/her to accomplish more than many individual owners/landlords can.
Conclusion
You don’t need to pick between property quality and rent collection. However, reactive maintenance can cost as much as 3-5 times more than preventive maintenance, in addition to driving off of your tenets.
Professional property management is what helps you transition from a reactive to a proactive approach. With help with smart budgeting and retaining good tenants, you’ll be able to start making money again instead of spending it on repairs.
Partner with expert property managers today!
