The purpose of this article is to outline the importance of budgeting for maintenance involved in owning an investment property.
By setting a realistic budget for regular maintenance and understanding how you may need to distribute your money can help you avoid small issues turning into major costly repairs.
Funding major issues
A real estate investor must be financially prepared to upkeep major maintenance or repairs on their property.
Some investors will have money set aside (if this is not possible, investors should have a contingency plan in place) for repairs without needing to visit the bank, however, it’s a good idea to find out if there are any tax advantages to borrowing against the home.
In some cases, investors may be able to claim a tax deduction on interest on loans taken out for the maintenance of the investment property.
If you own an investment property, it’s a good idea to discuss this with your lender before any issues arise so that you’ll know which option is best in the event of needing to secure funding quickly.
You can learn more about budgeting for maintenance in this blog article.
The Property Manager’s role
A property manager is responsible for ensuring the investment property remains rentable and the tenants do not breach their lease contract.
The property manager has a duty of care to report any maintenance issues immediately to the owner before they get out of control and become major repairs which are costly to fix.
Once the problem has been identified it is then up to the real estate investor to approve the necessary steps to have the issue resolved.
Some property management agencies will ask investors for an amount of cash up front, to be kept in the Trust for emergency repairs, so they can fix issues quickly without having to gain the investor’s consent.
Investors should be aware of what they are signing up for when choosing who manages the property management rights and how much approved repair money they can sign-off on.
When conducting maintenance and repairs on your investment property it is worth considering the need of contractors to get the job done quickly.
Although DIY (Do It Yourself) is still an option, if tasks are out of an investor’s expertise, it is usually best to call a professional.
The best contractors can usually be found through word of mouth among friends and family.
A real estate investor should compile a list of trusted tradesmen contacts, especially if they have several properties in the same area, or if family and friends need a contractor for a specific job.
If the contractor can be guaranteed repeated work or referrals for large jobs they may also offer a discount.
An important part of successful property management is maintaining relationships and forging networks.
A contractor may tell you about other properties they have been working on which are coming up for sale, or they can assist with repairs at your principal place of residence.