Budgeting for maintenance
As a property investor, you usually have two main focuses with your investment:
1) maximise the return on your investment;
2) minimise your exposure to risk.
Repairs and maintenance relate to both.
When you start the process of looking for a tenant, your focus is usually securing the best price, in the shortest time and to the best tenant. Your best chance of successfully achieving these aims is to look at the presentation of the property during the leasing process.
Ask yourself: “Would I live here?”
Many rentals are in terrible condition. If you expect tenants to look beyond the mess, they will simply walk straight out.
Presenting a property in a beautiful state for lease doesn’t need to cost loads of money.
Consider these items, completed by professionals (keep the receipts and attached to the ingoing tenants’ condition report, as proof the property was professionally maintained prior to their tenancy):
cleaning including windows, fans, exhausts, blinds, walls;
- carpet cleaning;
- pool maintenance.
Every 5-7 years, depending on wear and tear, landlords should also consider:
- new carpet;
- fresh paint.
It’s suggested to build up a ‘rainy day’ fund of approximately six months’ rent to cover unforeseen events such as big ticket repairs, rental arrears, vacancy or your own changes such as employment, relationship or an additional family member that could impact your income.
Should you find yourself in a situation where you don’t have the funds for work required, look into where the work is deemed an “emergency” by law. If yes, you must carry the repairs such as essential living items ie. hot water systems etc.
If no, don’t commit to the work. If yes, speak to your mortgage broker, they might be able to restructure your loan to cover it.