When it comes to investment real estate, what kind of owner are you? Are you a hands-on, take-care-of-maintenance-on-a-scheduled-basis kind of owner? Or are you the “If they haven’t called me, everything must be fine” kind of owner?
As A.A. Milne, author of the Winnie-the-Pooh children’s books, once said, “One of the advantages of being disorderly is that one is constantly making exciting discoveries.” But in investment real estate, those exciting discoveries also could be expensive.
Do you have a schedule for your property manager to follow for regular maintenance of the heating, ventilation and air conditioning equipment on your rental property? If not, how long will that equipment run without oil, new filters and regular maintenance? Has your landscaper analyzed your irrigation system to maximize water penetration while also minimizing water use? How long has it been since the building interior or exterior has been painted? What does your annual roof maintenance program look like? Is the flooring in good repair? Wow, do you mean my real estate investment won’t just continue to make me money without having to maintain it? The answer is yes.
“Well, my tenant is on a triple net lease. It’s their job to maintain the property.” OK, but did your tenant receive a list of items requiring maintenance before moving in? If so, does regularly scheduled maintenance occur? If your tenant didn’t get a list of required maintenance items, do you let them know when maintenance needs become visible? Are they potentially in violation of their lease terms by not maintaining the property? See the problem? Without clear communication between landlord and tenant about property maintenance, you very well could make some exciting discoveries.
Speaking of leases, are you still on a month-to-month tenancy with your tenant? Are they paying market rent? Have you analyzed market rents recently? I’m amazed at how much income landlords give away each month simply because they’re not aware of current market rents. Call your commercial real estate specialist and check on market rents at least once a year. Get rental rates from comparable properties and make sure you’re getting the maximum income out of your investments.
One of my favorite sayings comes from the late comedienne Lily Tomlin. She said, “Reality is the leading cause of stress amongst those in touch with it.” Building wealth by operating real estate investments is a noble and thoughtful ideal. And it doesn’t have to be difficult if you realize you’re running a business. Potentially, it could be a very profitable business if you take care of things before they cause bigger, more expensive problems. Perform scheduled maintenance on your properties. Perform analyses at least annually on market rents and how your properties perform compared to similar properties in the market.
Hire a property manager if you find there’s not enough time in the day for these duties. Reality doesn’t have to be stressful.