Property Management Basics: Rental Property Repairs & Maintenance

1a. Have a process

It has been said that if one does not stand for something, they will fall for everything. Systems are in place to provide guidelines and to prevent both unnecessary initial calls, and expensive remedies.

At the start of a maintenance request (actual procedures is about 30 steps, including data entry, below are the key points):

1. Determine if health/safety hazard or it affects habitability, and/or if generally landlord responsibility
2. If yes, have someone look at it: Either a property manager, resident manager or trusted handyman (generalist)
3. Check to see if user error (tenant does not know how to use it)
4. If not, try to fix it (handyman)
5. If not possible, determine cost to replace (or measure and report later) and determine which specialist (ie, electrician, plumber, appliance) is best suited.
6. Schedule a second service call with specialist
7. Determine if repair or replace with quote (consider the age of the part to be replaced, and reasonable remaining useful life).
8. Execute the order, check that it is no longer a health/safety hazard.
9. Back Office: Photograph, document, pay invoice, track check clearing and file to report to owner (and/or for taxes).

Note: In this whole procedure, we ARE NOT concerned with whose “fault” it is, it is not relevant, it is always the owner’s responsibility to fix it, IF health/safety or habitability, what you determine later is who is paying the bill. 

Stay on top of it, because if any step in the process is skipped, the repair FAILS. 

Your base costs will be about $40-$60 for a generalist service call and $60-$100 for a specialist service call.

Note: $40 minimum (most of the time) is for a handyman of high integrity and skill, with the ability to diagnose issues usually better than a manager.People with this level of self-managed skill can easily find independent contracts for $5,000 gross per month, divided by 170 hours (4.25 weeks), that is about $35 per hour pay grade for labor (though they have to pay self-employed taxes and fees, just like real estate agents). Managers need to stay competitive.

1b. Focus on Systems for Extraordinary Results

Once we have on systems and standards, we no longer have to be bogged down by the day-to-day management of property, and we can think of ways to maximize it’s profitability, we actually recommend reading “The One Thing” book by Gary Keller and Jay Papasan, we will cover in the the section below one of the many very important concepts that forms a core of what we believe managers and business owners in general should do. Check it out if you have the chance.

When presented with a repair order, the fundamental question is if it should be repaired or replaced. We will use an example of a stove (cooktop, or gas range). If it were not working, we would have to pay minimum $200 (we have never paid less than $150 for stove repair, with at least that much for parts for the older ones with discontinued parts).

So for about $300 more, we can have a brand new stove, with a brand new warranty. If we had an older stove (gas range) that just did not work (keep in mind, appliances, similar to electronics, have all their parts break down at once, if one thing goes, the others will likely follow soon after), we would not send anyone else there and just recommend the owner replace it. This is case-by-case, but most of the time, we do not need to spend $60 more to find out that we need to order a $200 discontinued part with a $350 bill (including labor), when we can buy and install a new one for under $600.

On the flip side, we recently had a built-in refrigerator that could not stay cold, we had an appliance specialist look at, expecting to change the freon (about $300-$500), the invoice turned out to be $160 as it was merely the condenser (the big coil) that was too dusty and shut off to prevent overheating. It is important to keep calm so as to not over pay the repair, it is almost always worth it to pay $60-$80 for a second opinion if your alternative is to pay $1,000 to replace it (or pay a handyman to change the freon, which DOES NOT solve the issue). It really is a risk-adjusted decision based on available information and expenses.

1c. Conclusion

Maintenance is a very important and core aspect of property management, right after collecting rent. Proper maintenance really is the difference between cash flowing and writing checks each month.

A concept we follow is the concept of E -> P, Entrepreneurial to Purposeful, from what is natural to what is systematized.

This would be doing things “on-the-fly” and applying “as needed” solutions. An example of today’s topic would be to use intuition rather than methodical and rational decision making when deciding how to maximize money spend on your rentals.

Purposeful is the FOCUS, MODELS and SYSTEMS that leads to Breakthroughs.

There are some who may resist stating that they would like to keep their “personality” and “creativity”. My response is that all small businesses start from E (Entrepeneural) and, if they are to grow, end up P (Purposeful), and that personality and creativity are layered upon a strong foundation. Said another way:

If you were to think about it, it makes perfect sense, the Entrepreneurial spirit with a Purposeful underpinning will always beat just the spirit. This can be applied to many aspects of our personal lives and our business, but we have found it to be very effective in the realm of propertymanagement.

Next week’s topic is not yet decided on, stay tuned or reply is there is any topic you would like to see covered in depth as we have been doing in this workshop series, thank you again for your support. 

2. Offering: 
There are many ways to work with us.

Full Service: We give referrals fees and tell the principal to contact their referring agent when looking to buy or sell.

Management Network (Agent/PM Page): If you are a property manager looking to join our network, see the backoffice link below to see what we are all about and contact me for more details!
We are also purchasing management portfolios (roll-ups), contact me if you are looking to sell your servicing rights, we are flexible in arrangements.

We are diligently working on our second thousand properties.

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