How to keep your home rental repairs down to maximize your income
- As a property management company, we use licensed professionals first and foremost. We also insist that they are insured. I will go into why, later in this blog. Why licensed contractors versus say a handyman? Well the cost of fixing a home repair twice can more than double the original cost quickly. There have been occasions that in order to cut a repair bill an experienced “handyman” was used, but it only takes one instance of poor workmanship to cause the home owner heartburn when doing a walk-through between tenants. It is your responsibility as a property manager to ensure the home is maintained at the same level as it was when it was first rented. When the tenant moves out, any wear and tear or repairs need to be done in a manner as to restore the home to the best condition possible. Cutting corners by using unqualified contractors is a sure way to lose your client and harm your long-term relationships built on maintaining the investment home for the home owner.
- Always bid out the work to be done. Heartland Properties uses at least three bids on every job to ensure the costs are managed and the quality/cost balance is the best value. Ensure that the scope of the entire job to be done is detailed out in writing. There have quite a few times in my career where on-site managers have hired a contractor and the quote for a job read, “paint room – $200”. I want to know that the trim is included, that the door hinges will not be painted over, does this include the ceiling or not? If the scope of the job is not spelled out in detail your recourse is limited to go back and hold the contractor responsible for “completing” the job to your expectations. You cannot be too demanding when it comes to requesting the contractor to be specific will all the details of the work, they will be doing for you.
- Never pay the contractor in full prior to the work being started. We usually will pay 25% upfront and the balance at completion and sign-off of the job being completed per the quote. Some instances of the contractor being paid the majority of the quote up front has caused many a property owner to experience a longer then planned refurb job as the incentive to finish quickly was diminished with the prepayment. Remember a quick turn time on rentals is money in the home owners pocket by reducing turn time between tenants.
- Finally, to circle back to the reason an insured contractor is an important requirement. Accidents happen on the home site for many reasons. A car gets hit by the contractor, material like paint/solvents damage flooring or home furnishing. A careless repair to the electrical system causes damage. These issues happen more frequently than you think and by requiring the contractor to carry insurance it eliminates the cost from being put in your lap further decreasing your profitability. You are in the business of making money as a home owner. You hire a property management company to look out for your best interests in the pursuit of turning your property into a cash flowing entity. Managing the repairs and replacement of household items is paramount to maintaining your investment for resale someday and ensuring your profits on a yearly basis.